Ruble loses value: oil price makes Kremlin happy

Ruble is depreciating
The price of oil makes the Kremlin happy

Oil is becoming more expensive, the ruble cheaper. This is good news for Russian President Vladimir Putin. Because this increases the government's room for maneuver.

The increased oil price is pouring a lot of money into Russia's coffers. The raw material has risen sharply since the beginning of the year, while the ruble rate has fallen significantly. Since oil is traded in dollars, the state is taking in more rubles per barrel than has been the case since mid-2019, reports the Bloomberg news agency.

This means that the Kremlin has around 33 billion dollars in additional revenue, it was said. With this money, the Russian government could, for example, increase social benefits or stimulate the economy in order to counter the growing dissatisfaction in the population. The stagnating standard of living had contributed to the protests on the occasion of the arrest of the oppositionist Alexei Navalny. A new parliament will be elected in Russia next autumn.

In the course of the virus crisis, the Russian economy collapsed more than it had in eleven years. Economic output shrank by 3.1 percent in 2020, according to the state statistics office Rosstat.

Among the reasons for the slump, Rosstat cited economic containment measures to fight the pandemic, as well as a decline in global demand for energy. The economy last experienced an even deeper crash in the wake of the global financial crisis in 2009. The price of oil, the country's most important export, fell sharply last year.

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