Russian ruble slumps to near 17-month low, briefly moves past 100 against dollar

The Russian ruble briefly notched 100 to the U.S. greenback on Monday, nearing a 17-month low as President Vladimir Putin’s financial advisor blamed free financial coverage for the speedy depreciation.

The ruble has misplaced round 30% in opposition to the dollar because the flip of the yr. The Financial institution of Russia has blamed the nation’s shrinking steadiness of commerce, as Russia’s present account surplus fell 85% yr on yr from January to July.

By mid-afternoon in London, the ruble was buying and selling simply above 101 to the greenback. Russia’s central financial institution later introduced it’ll maintain a rare charge assembly on Tuesday. In an announcement, it mentioned the assembly will probably be held “to think about the problem of the important thing charge stage” and it will announce the board’s choice at 10:30 a.m. Moscow time.

Putin’s financial advisor, Maxim Oreshkin, informed Russia’s state-owned Tass information company that the depreciation of the foreign money and acceleration of inflation was primarily resulting from “free financial coverage” and that the central financial institution has “all the mandatory instruments to normalize the state of affairs within the close to future.”

“A weak ruble complicates the restructuring of the economic system and negatively impacts the actual incomes of the inhabitants. Within the pursuits of the Russian economic system — a powerful ruble,” he mentioned, in accordance with a Google translation.

The central financial institution on Thursday halted international foreign money purchases for the remainder of the yr in a bid to shore up the foreign money, which is fueling fears of rising inflation as Russia makes an attempt to essentially remodel its economic system within the face of accelerating isolation and punitive Western sanctions.

Russian GDP exceeded expectations to develop by 4.9% yr on yr within the second quarter, new figures from the Federal State Statistics Service confirmed Friday, rebounding from a 1.8% contraction within the first quarter.

However William Jackson, chief rising markets economist at Capital Economics, famous that restricted slack within the economic system is more likely to additional gas inflation pressures and lead to financial coverage tightening, probably weakening progress over the rest of the yr and into 2024.

“Maybe the important thing threat to the economic system is that if the federal government retains fiscal coverage free to assist the warfare effort, which might trigger Russia’s financial vulnerabilities to worsen additional,” Jackson added.