The Russian currency, the rouble, has recently hit a symbolic threshold of 100 roubles to the dollar, sparking fears of financial instability and memories of past economic collapse. The rouble has now lost one third of its value since August, reaching its lowest level since March 2022. This drop comes after the US imposed sanctions on Gazprombank, triggering panic buying on the forex market.
Historically, the exchange rate of the rouble has been a concern for Russians, stemming from a time when only the elite were allowed to own foreign currency during Soviet times, and the chaos and hyperinflation of the 90s wiped out savings for many. The fear now is that inflation will soar as imports become more expensive with the falling rouble.
The central bank has implemented emergency rate rises in the past to combat a falling rouble, and currently the rate stands at its highest level since 2003 at 21%. However, instead of raising rates further, the central bank has stopped buying foreign currency in an attempt to stabilize the markets.
Finance minister Anton Siluanov has stated that the weak rouble is favorable for exporters, suggesting that the Kremlin may be content with the current state of the currency. However, with inflation running at around 8%, ordinary Russians are unlikely to share this sentiment. The weakening rouble and soaring inflation are causing concern among the general population, who may face further financial hardship if the situation continues.
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Photo credit news.sky.com
