“The Russian ruble is falling sharply: the reasons and further forecasts became known. The Russian ruble reached a 32-month low, falling to 106.40 per dollar. The fall of the currency was caused by sanctions against the financial sector of the Russian Federation and violation of foreign trade payments.”, — write on: unn.ua
The fall of the ruble came as a surprise to economists, who in early November predicted in a Reuters poll that the ruble would reach 100 per dollar in just a year. Last week, the ruble fell to a 32-month low.
As of 08:00 GMT, the ruble lost 0.86% to 106.40 per dollar, according to LSEG data. The yuan also fell 0.51% to 14.74, its lowest level since March 2022, when Russia’s invasion of Ukraine began.
The weakening of the ruble is intensifying against the backdrop of a more than 20 percent drop in the Russian stock market this year.
“The market is waiting for the reaction of the financial authorities to the devaluation of the ruble,” BCS brokerage analysts say, stressing that forex purchases “resemble panic in conditions of uncertainty.”
The falling ruble is fueling inflation that will exceed the central bank’s forecasts for this year, at odds with the regulator’s painful tightening of monetary policy, with the key interest rate at its highest level since 2003.
According to the central bank’s estimates, a 10% weakening of the ruble adds 0.5 percentage points to inflation, meaning that a four-month fall in the ruble could add 1.5 percentage points to current inflation.
“For the central bank, this is a challenge in the fight against rising prices,” said economist Yevhen Kogan.
Many analysts predicted that the ruble exchange rate could reach 115-120 by the end of the year, and some called on the government and the central bank to take measures, for example, to force exporters to sell more currency and to reduce purchases of foreign currency by the state.
The fall in the ruble was exacerbated by new sanctions against Russia’s financial sector, which disrupted foreign trade payments, especially for oil and gas, creating a physical shortage of the currency in the Russian market, analysts said.
Most of the big Russian banks are currently under US sanctions and therefore cannot conduct banking operations in dollars, and their only option for currency trading is to import large amounts of cash dollars.
We will remind
The head of the GUR Kyrylo Budanov predicts that in the summer of 2025, Russia will face financial and economic problems and a lack of new recruits. The Russian Federation may be forced to announce mobilization or reduce the intensity of hostilities.