The Russian rouble has dropped to its lowest level in more than 32 months, falling beyond 110 to the US dollar for the first time since just after the Ukraine invasion, according to Russian state media. The currency’s decline is attributed to geopolitical risks surrounding the war in Ukraine and new US sanctions. The rouble also broke through the 15 mark against China’s yuan, further indicating its weakened state.
The fall in Russia’s currency has been accompanied by a more than 20 percent drop in the stock market this year as investors shift savings from stocks to deposits. Analysts suggest that the market is in a state of uncertainty, with forex purchases resembling panic reactions.
Analysts predict that the rouble could continue to weaken, possibly hitting 115 to 129 against the dollar by the end of 2024. Russia’s finance minister has dismissed concerns over the rouble’s decline, suggesting that it could benefit exports, but could also lead to increased inflation as import prices rise.
The rouble’s slide has been worsened by new sanctions on Russia’s financial sector, disrupting foreign trade payments and creating a currency shortage in the market. Most major Russian banks are under US sanctions, limiting their ability to carry out transactions in dollars. Importing large quantities of dollars in cash has become the only option to trade foreign currency.
Overall, the weakening rouble signifies the economic challenges Russia is facing due to geopolitical tensions and sanctions, impacting both domestic and international trade.
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