The Russian Central Bank has taken bold step to halt the Ruble’s free fall, showing its commitment to maintaining economic stability. Ruble is continuously on free fall since Russia started war against Ukraine.
The Russian ruble has experienced a notable decline, losing over fifty percent of its value against the US dollar since March 2022. This depreciation is a result of Western sanctions that have restricted Russia’s access to the global financial system. To address this, the central bank has raised interest rates, aiming to enhance the appeal of holding rubles by increasing their profitability for saving purposes. However, uncertainties remain regarding whether this measure will effectively halt the ongoing decline of the ruble.
Factors Behind Free Fall of Russian Ruble.
Being an observer of the conflict I can say that Multiple factors have contributed to the significant devaluation of the ruble. The persisting conflict in Ukraine has played a pivotal role, and the absence of prospects for an immediate ceasefire adds to the challenges. Over time, this situation may lead to elevated oil prices, a circumstance detrimental to Russia’s economy. Consequently, the task of stabilizing the ruble becomes more complex for the central bank.
If we talk about the imposition of sanctions by the US and its allies it has further isolated Russia from the global economic landscape. I think these measures have created impediments to financing the country’s military activities, potentially exacerbating the economic strain and consequently weakening the ruble even more
While the central bank’s decision to raise interest rates is noteworthy, its efficacy in arresting the ruble’s decline remains uncertain. The fluidity of the Russian situation renders predictions about future developments difficult. Nonetheless, it is evident that the ruble is currently in a precarious state, presenting the central bank with a formidable challenge in its efforts to achieve stability.