Normal Russians are unlikely to share the Kremlin’s view of the collapsing currency and soaring inflation in Russia. The exchange rate of 100 roubles to the dollar is seen as a significant threshold, sparking fears of financial instability and memories of past economic collapses. The rouble recently hit 114 against the dollar, leading to panic in the currency markets.
The currency’s value has dropped by one-third since August, with the US imposing sanctions on Gazprombank, triggering panic buying on the forex market. Some predict the dollar rate could reach 120 by the end of December. The obsession with the exchange rate has historical roots, dating back to Soviet times when owning foreign currency was a luxury.
In response to the currency crisis, the central bank raised interest rates to 21%, the highest level since 2003. The government, however, seems unconcerned, with the finance minister stating that the weak rouble is favorable for exporters. This has led to speculation that the Kremlin is content with the currency’s current situation.
Despite government reassurances, ordinary Russians are feeling the pinch of inflation, which is running at around 8%. The decision to stop buying foreign currency in an effort to stabilize the markets may not alleviate their concerns. With memories of past economic turmoil still fresh, the average Russian is unlikely to view the current financial situation in a favorable light.
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Photo credit news.sky.com
