The Russian ruble extended its decline today, losing a quarter of its value since August. It now takes more than 113 rubles to purchase one U.S. dollar.
This sharp drop has surprised economists, who, according to a Reuters poll conducted in early November, had anticipated the ruble would reach the 100 mark against the dollar within a year.
The ruble’s weakness has been exacerbated by a more than 20% decline in the stock market this year, as investors move their savings from equities to bank deposits offering interest rates higher than the central bank’s benchmark rate of 21%. Analysts now predict the ruble could fall further to 115–120 against the dollar by year-end.
The currency’s decline is also intensifying inflation, which is expected to surpass the central bank’s forecast for the year. This trend undermines the regulator’s aggressive monetary tightening measures, with the benchmark interest rate at its highest since 2003. The central bank estimates that a 10% weakening of the ruble adds 0.5 percentage points to inflation, suggesting the ruble’s four-month decline could contribute an additional 1.5 percentage points to the current inflation rate.
“For the central bank, this poses a significant challenge in controlling rising prices,” said economist Evgeny Kogan.
The ruble’s slide has been further worsened by new sanctions targeting Russia’s financial sector, which have disrupted foreign trade payments, particularly for oil and gas, creating a shortage of foreign currency in the Russian market, analysts noted.
