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momentum, Putin extended the program until July 2024, albeit with a bumped-up discounted rate of 8% from the previous 7%.
Tatiana Orlova, an economist at Oxford Economics cautioned, "Subsidized mortgages fuel an explosive expansion in the construction sector. However, at a certain juncture, the pace of mortgage growth is bound to decelerate, potentially leaving the construction industry saddled with an oversupply of unsold apartments." The intricate dynamics of the mortgage market, coupled with the broader real estate landscape, warrant a closer examination as Russia navigates these evolving economic challenges.
The big event of the month was the ruble’s crash through RUB100 to the dollar . In August, the ruble's exchange rate has been at its weakest since spring 2022. Compared to August of last year, the exchange rate of the ruble has been about 40% weaker.
In order to curb the inflationary pressures caused by the sharp weakening of the ruble and domestic supply constraints, the Central Bank of Russia raised its key interest rate by 3.5 percentage points in the extra 15.8. in its held meeting. The interest rate is now 12%. According to media reports, there have also been discussions in Russia about reintroducing restrictions on various capital movements.
The ruble's weakening is mainly due to the melting of Russia's exceptionally large current account surplus last year. According to the Russian central bank's preliminary estimate, the current account surplus was only $25bn in January-July, or 85% lower compared to last year's peak figures.
It took a few days but the ruble rallied and was trading at RUB94 to the dollar by August 18. The currency was help after the financial elite met with leading Russian corporate and encouraged them to exchange dollars that acted as an informal intervention and rallied the ruble.
The authorities had been contemplating introduce formal capital controls and reintroducing the mandatory 80-90% foreign exchange surrender requirement, but as is often the case, Nabiullina and Russian Finance Minister Anton Siluanov found a temporary solution that did the trick without resorting to CBR interventions on the exchange markets and so burn up precious international reserves.
Ukraine’s counteroffensive has entered a new phase. The Armed Forces of Ukraine (AFU) has made progress and broken through Russia’s first defensive line in the southern regions in an attempt to reach the beaches of the Sea of Azov.
This followed a secret meeting on the Polish border between Nato military leaders and Ukraine’s high command where it appears that Nato
RUSSIA Country Report September 2023 www.intellinews.com