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Russian economy under pressure / Ruble falls to 16-month low against dollar

2023-08-14 15:25:00, Kosova & Bota CNA

Russian economy under pressure / Ruble falls to 16-month low against dollar

The ruble has fallen to its weakest point in almost 17 months as a collapse in export earnings and rising military spending put pressure on the Russian economy, The Guardian reports.

The currency has steadily lost value in a long slide since the start of the year.

It has weakened 26% this year, making it the world's third-worst performing currency in 2023.

Russia's central bank said on Monday it was considering raising the key interest rate at its next meeting scheduled to stabilize inflation, but added it saw no threat to the country's financial stability from the ruble's decline. The central bank blamed the slide in the currency's value on falling export volumes and rising domestic demand for imports.

The ruble has experienced a turbulent course since Russia invaded Ukraine in February 2021, falling to a record low of 150 to the dollar two weeks after the war began before recovering sharply after the Russian central bank imposed strict capital controls that limited the flow of money abroad.

By last summer, the ruble had rebounded to a seven-year high as a surge in oil and gas prices, partly a result of the occupation, helped Russia boost export earnings while consumer imports fell.

Russian oil revenues have fallen drastically since Western price caps and embargoes were imposed, while imports have recovered. The government has also spent billions on the defense industry to continue the war in Ukraine, with many critical goods still coming from abroad.

The ruble's decline accelerated after the aborted uprising in June by Yevgeny Prigozhin and his band of Wagner mercenary fighters prompted Russians to transfer money to foreign accounts./ CNA





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