Central bank to hold meeting amid ruble decline

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【Summary】The Russian central bank will hold a surprise meeting to discuss its key rate as the ruble hits a 16-month low against the dollar. The ruble has lost 30% of its value this year due to declining export revenues, rising imports, and increased military spending. The central bank recently raised the key rate to 8.5% in July. The decline in the ruble has raised concerns about inflation and the impact on ordinary Russians' standard of living.

FutureCar Staff Aug 14, 2023 10:27 AM PT

Central bank to hold meeting amid ruble decline

The Russian ruble reached a significant milestone on August 14, 2023, as it slid past 100 against the dollar, marking its lowest level in over sixteen months. In response to this development, the Russian central bank announced that it would hold a meeting on Tuesday to discuss its key rate.

The decline in the value of the ruble has been a cause for concern, as it has lost around 30 percent of its value against the dollar since the beginning of the year. This depreciation can be attributed to a drop in export revenues, rising imports, and increased military spending.

Surprisingly, the central bank decided to convene a meeting to consider the key rate, which was recently raised to 8.5 percent in July. The outcome of the meeting will be disclosed at 10:30 local time (0730 GMT).

Following the news, the ruble showed some signs of recovery, trading at 100.02 to the dollar at 1416 GMT. However, it had earlier reached its lowest level since March 23, 2022. Against the euro, the ruble also experienced a decline, trading at around 109.15, nearing a 17-month low.

The announcement of the central bank meeting came after Kremlin aide Maxim Oreshkin criticized what he referred to as "loose monetary policy" in an opinion piece published by the state-run TASS news agency. Oreshkin expressed confidence in the central bank's ability to address the situation and predicted that the ruble exchange rate would normalize in the near future.

The depreciation of the ruble has raised concerns about the potential impact on the standard of living for ordinary Russians, as inflation begins to rise. This, coupled with the effects of Western sanctions and the departure of foreign companies from the country, has started to affect some Russians.

Evgeny Kundratas, a 44-year-old HR entrepreneur, expressed his frustration, stating that the increasing cost of foreign currency is inconvenient. Analysts have warned that the ruble could decline further to 115-120 per dollar, emphasizing the need for a reduction in imports or decisive action from the monetary authorities to halt the decline.

The decline in the ruble can be attributed to falling export earnings, which reduces the availability of foreign currency in the domestic market. In response to the worsening situation, the Russian central bank announced last week that it would cease purchasing foreign currency on the domestic market in an attempt to stabilize the national currency.

Viktor Rybakov, a 61-year-old healthcare worker, expressed his concerns about the impact of the ruble's fall on prices, predicting that everything from transportation to food prices would rise. He emphasized that ordinary citizens would be greatly affected by these developments.