Page 64 - RusRPTAug23

The declining ruble exchange rate poses challenges for the Russian economy and individuals alike. It increases the cost of imported goods, exacerbates inflationary pressures, and reduces the purchasing power of Russian citizens. The country's authorities will need to address the underlying issues affecting the ruble and work towards improving economic stability to restore confidence in the currency.
Central Bank head Elvira Nabiullina also said the changes to the balance of trade (a drop in the difference between exports and imports) was the main reason for the ruble’s weakness.
The ruble’s collapse coincided with an unexpected midnight meeting between Russian President Vladimir Putin and Prime Minister Mikhail Mishustin that extended into the early hours of Wednesday morning. It’s not known whether the ruble was discussed and there is no word of it in the published account of the meeting. However, the economic successes that Mishustin reported to Putin (and which are in the published account) are yet more reasons for the ruble’s fall — they include an increase in real incomes, record low unemployment and growing demand among consumers and wholesalers.
There is a school of thought suggesting that the devaluation of the ruble can be advantageous for Russian officials, as it allows the country to acquire more rubles for the same amount of raw material exports. However, this idea is less relevant today compared to the late 1990s when revenue was directly linked to oil prices. Currently, revenues are predetermined, and self-imposed rules require the Finance Ministry to buy or sell foreign currency reserves based on
64 RUSSIA Country Report August 2023 www.intellinews.com