In the aftermath of a spectacular rise in interest rates, and while the ruble remains at a historically low level, the Russian authorities have chosen the status quo. On Wednesday August 16, the President, Vladimir Putin, received members of the government and the representative of the Central Bank of Russia, Elvira Nabioullina, to discuss the means of stopping the fall of the national currency.
A sign that the question is delicate, no press release was issued after the meeting. daily business, Vedomosti, assured however, Thursday morning, that the participants had given up on the most radical measure – defended by the Minister of Finance, Anton Silouanov –, namely an obligation for exporting companies to change into rubles almost all of their income. export within ninety days. Such a measure, which would reinforce an already strict control of capital movements, was apparently deemed too risky for the proper functioning of the economy.
The central bank’s decision on Monday to cut interest rates from 8.5% to 12%, however, offered only respite to the currency. Admittedly, the exchange rate has fallen back below the psychological and symbolic bar of 100 rubles to the dollar, which reminds Russians of the harshest crises experienced over the past thirty years. On Wednesday evening, the currency thus traded at 94.67 rubles for 1 dollar and at 103.2 rubles for 1 euro.
But the general opinion, including that of Alfa Bank analysts, the rate hike will not be enough to reverse the downward trend. Since the beginning of the year, the ruble has continued to depreciate. It has thus lost almost 25% against the dollar, a poor performance which puts it in the same category as the Turkish lira or the Argentine peso.
Economic imbalances
For the federal budget, strained by the conflict in Ukraine, a weak ruble makes it possible to reduce the cost of the war effort. And the power abstained for several months from any serious intervention. Nevertheless, the inflationary risk is now too great. The rise in prices has thus reached 7.6% over the last three months, and analysts predict that those of basic necessities will continue to increase.
The risk is also political: in his television show, on Thursday August 10, the propagandist Vladimir Soloviev warned of the dangers of unbridled inflation at the time of the campaign for the re-election of Vladimir Putin, in March 2024. The same also mentioned a “subject of international mockery”.
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