Ruble tumbles as Russia's war economy comes under increasing strain
Source: politico
New sanctions package closes one of the last conduits of hard currency to Moscow.
November 27, 2024 6:23 pm CET By Carlo Boffa
The ruble tumbled on Wednesday to its lowest level in over two years, as a mix of low oil prices, new sanctions against Russian businesses and burgeoning government spending on its war effort put ever-greater strain on the Russian economy.
The central bank reacted by suspending currency purchases for the rest of this year. That will restrict the supply of rubles and should support the exchange rate accordingly. It took a similar step last year, after the mutiny of mercenary leader Yevgeny Prigozhin triggered another crisis of confidence.
As such, the measure will help to keep a lid on a growing inflation problem, which has forced the central bank to raise its key interest rate to 21 percent.................
The ruble has been under steady pressure all summer, as the price of oil — Russia’s most important export, despite Western sanctions — has fallen due to weak Chinese and European demand and rapidly growing supply from the U.S., Brazil and Guyana.................
That pressure intensified after the U.S. imposed a new round of sanctions on Gazprombank, which until then had been allowed to process payments for what remains of Russia’s gas export business to Europe. The new package also targeted 50 internationally connected Russian banks, more than 40 Russian securities registrars, and 15 Russian finance officials. .............
Read more: https://www.politico.eu/article/ruble-value-falls-russia-war-economy-ukraine-oil-prices-sanctions-inflation-interest-rates-oligarchs/
Until the citizens--the regular folks start feeling really pinched, nothing will happen.
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The ruble fell as far as 114.75 to the U.S. dollar according to data from Investing.com, a level unseen since March 2022, just after Russia had started its war in Ukraine. | Natalia Kolesnikova/AFP via Getty Images
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