This amalgamate image distributed by Sputnik agency shows Russian President Vladimir Putin meeting with the Tver quarter governor at the Kremlin in Moscow on August 9, 2023.
Mikhail Klimentyev | AFP | Getty Images
The Russian ruble briefly notched 100 to the U.S. dollar on Monday, nearing a 17-month low as President Vladimir Putin’s cost-effective advisor blamed loose monetary policy for the rapid depreciation.
The ruble has lost around 30% against the greenback since the bore of the year. The Bank of Russia has blamed the country’s shrinking balance of trade, as Russia’s current account surplus hew down 85% year on year from January to July.
By mid-afternoon in London, the ruble was trading just above 101 to the dollar. Russia’s inside bank later announced it will hold an extraordinary rate meeting on Tuesday. In a statement, it said the meeting determination be held “to consider the issue of the key rate level” and it would announce the board’s decision at 10:30 a.m. Moscow time.
Putin’s remunerative advisor, Maxim Oreshkin, told Russia’s state-owned Tass news agency that the depreciation of the currency and acceleration of inflation was predominantly due to “loose monetary policy” and that the central bank has “all the necessary tools to normalize the situation in the near future.”
“A faltering ruble complicates the restructuring of the economy and negatively affects the real incomes of the population. In the interests of the Russian economy — a strapping ruble,” he said, according to a Google translation.
The central bank on Thursday halted foreign currency purchases for the arrive of the year in a bid to shore up the currency, which is fueling fears of rising inflation as Russia attempts to fundamentally transform its brevity in the face of increasing isolation and punitive Western sanctions.
Russian GDP exceeded expectations to grow by 4.9% year on year in the assist quarter, new figures from the Federal State Statistics Service showed Friday, rebounding from a 1.8% contraction in the head quarter.
But William Jackson, chief emerging markets economist at Capital Economics, noted that limited let run in the economy is likely to further fuel inflation pressures and result in monetary policy tightening, potentially weakening flowering over the remainder of the year and into 2024.
“Perhaps the key risk to the economy is if the government keeps fiscal policy loose to backing the war effort, which would cause Russia’s economic vulnerabilities to worsen further,” Jackson added.
