Russia’s ruble slipped past 100 per U.S. dollar on Monday morning, a nearly 17-month low that has sparked internal discord over monetary policy as economic pressures from its ongoing war in Ukraine mount and international sanctions erode Moscow’s income streams.
The ruble traded at nearly 101 to the U.S. dollar on Monday morning, the first time it has fallen below the symbolic threshold since March last year.
The slump, part of an accelerating downward trend in recent weeks, is a long way from the ruble’s record low in March 2022—it hit around 120 against the dollar shortly after Moscow launched its invasion—but almost half its value in June 2022, when it hit a multi-year high despite international sanctions.
It marks a loss of around 25% of the ruble’s value against the greenback since the start of this year and before the invasion the currency was worth around 76 rubles per dollar.
The latest decline positions the ruble alongside Turkey’s lira and Argentina’s peso as one of the three worst performing emerging market currencies against the greenback this year, according to Bloomberg.
Maxim Oreshkin, Russian President Vladimir Putin’s economic advisor, said the Kremlin expected the currency to normalize in the near future, according to Reuters, citing an op-ed he had written for TASS news agency.
Oreshkin, who said the Kremlin wanted a strong ruble, blamed the currency’s recent decline and accelerating inflation on “soft monetary policy” from Russia’s central bank.
Oreshkin’s finger pointing at the central bank is a rare sign of public discord among Moscow’s governing institutions since the invasion of Ukraine began. The central bank, which hiked interest rates at a sharper rate than anticipated in July and stopped purchases of foreign currency for the rest of the year last week to shore up the ruble, offers a different explanation for the ruble’s decline, notably the country’s deteriorating trade with foreign partners. The central bank is expected to raise rates again soon.
The ruble has been on something of a rollercoaster since Russia launched its invasion of Ukraine. On the back of immediate reactions to the war, it fell to record lows against the dollar before recovering to the highest levels against the greenback since 2015 and becoming one of the world’s best performing currencies. International trade conditions have been a key driver of the ruble’s value, particularly for Russia’s key energy exports. Russia is a key exporter of oil and gas and Europe, previously its main buyer, has been weaning itself off and imposing sanctions like price caps, dampening prices. These prices are rising now as oil demand soars and Moscow looks to Asia—particularly China and India—to find other buyers.
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