Rouble plummets over 24% since August, hits record lows

The Russian rouble continued its downward trend on Wednesday, weakening against both the US dollar and China’s yuan. Since early August, the rouble has plummeted over 24 per cent, hitting a 32-month low last week.

At 0800 GMT, the rouble was trading at 106.40 per dollar, down 0.86 per cent, and at 14.74 per yuan, a 0.51 per cent drop and its lowest since March 2022, the start of Russia’s Ukraine invasion.

The rouble’s slide has been driven by economic uncertainty and an over 20 per cent fall in the stock market this year, prompting investors to shift to higher-yielding deposits.

Analysts have noted that the weakening currency is contributing to inflation, which is expected to surpass the central bank’s forecast. The central bank estimates that a 10 per cent fall in the rouble adds 0.5 percentage points to inflation, implying the current decline could add 1.5 percentage points to inflation.

The rouble’s depreciation is compounded by new sanctions that have disrupted foreign trade payments, particularly for oil and gas, leading to a currency shortage.

While the weak rouble benefits export-oriented companies and boosts government revenues through energy taxes, economists and analysts are calling for measures to stabilise the currency, including increasing forex sales by exporters and reducing state forex purchases.

Attribution: Reuters

Subediting: M. S. Salama