Officials are expected to raise interest rates at an emergency meeting. However, it is not clear that the Bank of Russia can do much in the short term
is now worth less than a solitary cent: on August 14th it slipped past the value of 100 to the American dollar. The currency is at its cheapest since the immediate aftermath of the invasion of Ukraine, and has become one of the world’s worst performers this year, outdone only by perennially troublesome peers like the Argentine peso, Venezuelan bolivar and Turkish lira.
Often currency collapses are prompted by nervous international investors or fleeing domestic capital. Yet trading in the rouble, especially against the dollar, remains thin. Sanctions and capital controls have left Russia isolated from the international financial system.
A cheap currency raises the rouble value of the government’s oil revenues, but it also raises the cost of the imports. In June Andrei Belousov, Russia’s deputy prime minister, said the value at the time of 80-90 roubles a dollar was best for the country’s budget, exporters and importers. When the rouble was far stronger last year, thanks to oil revenues, the Russian government was happy to tout it as evidence Western sanctions were failing. That confidence has now been replaced by concern.
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