The official, speaking on condition of anonymity, told reporters that foreign currency restrictions put in place by the Russian government meant that the international valuation of the rouble, which fell sharply at the start of the war but has picked up somewhat in recent days, was not driven by supply and demand.
The emerging activity on the black market showed a sharp depreciation in the value of the currency, and reflected the weakness of the ruble as a financial instrument, the official added. The sharp rise in national inflation indicates a erosion of the ruble’s purchasing power.
The official said that the international valuation of the ruble is disconnected from the performance of the Russian economy due to controls aimed at preserving scarce foreign currencies. The official said the coordinated sanctions have had a very significant impact on the Russian economy, and outside analysts now predict a contraction of about 10% in Russian gross domestic product this year.
The official said Washington was happy with the application of sanctions and export controls so far, but remained on the lookout for any violations.
The ruble has become a deeply altered currency in terms of purchasing power, the official said, noting that weekly inflation has averaged around 1.5% over the past three weeks, for a cumulative increase of nearly 6%.
The value of the ruble against the dollar has largely recouped its losses since the start of the invasion of Russia on February 24. The ruble hit a more than five-week high at the start of trading in Moscow on Friday before settling in the 83-84 range to the dollar.
The United States intended the sanctions to be debilitating to the Russian economy and cripple the Russian military’s ability to procure parts and equipment for the war effort, the official said, adding that restrictions on exports of technologies administered by the US Department of Commerce would contribute to this objective.
Washington has planned to maintain humanitarian exemptions to sanctions, given growing food insecurity problems and Russia’s role as a major wheat producer, the official said.
Other exemptions were intended to protect Western financial institutions that hold Russian assets, through a license to make Russian debt payments.