The Russian ruble briefly weakened to an exchange rate of 100 to the dollar on Tuesday, a symbolic milestone that hasn’t been reached since mid-August. The dip in value comes after the central bank announced an increase in the benchmark interest rate to 13 percent in response to higher inflation. The ruble’s decline since mid-August is a reflection of the financial volatility caused by President Vladimir Putin’s war against Ukraine, with concerns rising about the country’s weakening economy and sustainability of its spending on the war.
Since Russia invaded Ukraine in February of last year, the ruble has experienced fluctuations in value, weakening to 135 per dollar in March 2022 due to Western sanctions and capital outflows. It later recovered due to a surge in oil prices and falling imports. However, in August, it slumped again, losing about 25 percent of its value against the dollar since the beginning of the year. The central bank responded by raising the benchmark interest rate to stabilize the currency.
The Kremlin’s spokesman, Dmitri Peskov, downplayed concerns about the ruble’s slip, stating that people should get used to living in the ruble zone and not depend on the dollar. President Putin also expressed confidence in the country’s stable economic situation, predicting a GDP growth of 2.5 to 2.8 percent for 2023. However, the central bank’s growth forecast was more conservative, ranging between 1.5 and 2.5 percent for the year. Overall, the ruble’s recent decline reflects the ongoing financial challenges faced by Russia due to the war with Ukraine and other economic factors.
