The Russian currency is at its weakest level in nearly 17 months. – This cuts ugly dents in the prestige of the Kremlin, says an economic commentator.
Now you must have a full hundred Russian rubles to buy one American dollar, because a ruble is not worth more than one cent.
In the past five days, the currency has shrunk more and more every day, according to bloombergand now it exceeds ten rubles for one Norwegian krone.
Embarrassingly, he believes one of the Kremlin’s most famous propagandists, Vladimir Solovyov, and slays Russia’s central bank in a fitting blast on Russian state television.
– They won’t even explain why the exchange rate is so low that they are laughing at us abroad! That the ruble is one of the weakest of the three currencies, Solovyov rages on television broadcasts.
A low ruble exchange rate is undesirable for Putin, because many see the exchange rate as a kind of measure of economy, explains E24 economic commentator Sindre Heyerdahl.
– If the exchange rate is weak, confidence in the country’s economy is usually not good. So this cuts unsightly dents in the Kremlin’s prestige, he says.
When Russia invaded Ukraine almost a year and a half ago, the ruble fell sharply right away. However, it didn’t take several weeks for the ruble to “return”, in fact becoming the strongest in many years against the dollar.
Despite the West’s attempt to choke off Putin’s income with sanctions, Russia’s currency has remained strong, in part because Russians are required to pay for oil and gas in rubles. At the same time, energy prices have skyrocketed, economic commentator Heyerdahl explains.
When the ruble has weakened sharply now, it is the result of long-term stress on the Russian economy, he says.
Heyerdahl highlights several factors:
- It takes time for sanctions to work properly, but the lack of advanced Western technology now is painful, among other things.
- At the same time, the state must find more and more funds. Whether to keep the war alive in Ukraine, or to pay, among other things, the families of fallen Russian soldiers.
- In addition, the budget deficit is growing, and in the past six months the Russians have had to import more and more, while earning less and less on the export of oil and gas.
The summer of Russia’s second year as an invading power in Ukraine was marked by the dramatic Wagner Rebellion, as Wagner’s mercenaries moved towards Moscow in revolt against the Russian Defense Command.
This, like other political turmoil and uncertainty, usually leads investors to move their money out of Russia, Heyerdahl says.
– When the Wagner group rebelled, we saw that the ruble fell sharply. He explains that the Russian currency was shocked by Wagner.
Inflation could be at its worst when Putin is in the midst of campaigning for next year’s presidential election, Kremlin propagandists Solovyov warned in his televised appearance.
In the history of the Russian news agency tas sites, Putin’s economic advisor Maxim Oreshkin responds to the criticism.
Today’s exchange rate has deviated significantly from the fundamental levels and is expected to return to normal in the near future. Writes Putin’s economic advisor.
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