Russian Rouble slips as officials blame sanctions, policy

stocks news

 The Kremlin blamed loose monetary policy for the decline in the value of the nation’s currency as the Russian Rouble slips amid an ongoing deficit, sliding below 101 against the United States (US) Dollar on Monday, after five consecutive days of decline, news agencies reported.

Overall, the rouble lost nearly 30 percent of its value against the US dollar in the year to date, according to Reuters.

The Kremlin blamed the central bank as the Russian Rouble slips to near new lows – Shutterstock

Meanwhile, President Vladimir Putin’s economic advisor Maxim Oreshkin blamed the central bank and its loose monetary policy for the rouble hitting the lowest point in 17 months, at 101.04 per US dollar.

Attempts by Russia’s central bank to arrest the slump by halting its foreign-currency purchases on the domestic market for the rest of 2023 were unsuccessful, according to Bloomberg.

Moscow has run a budget deficit for eight months in a row as it tries to shore up an economy that is battered by shrinking export revenues and isolation from international financial markets.

Sanctions, war and loose monetary policy to blame as the Russian Rouble slips

Western sanctions have exacerbated the situation further, Bloomberg reported. Whereas Bank of Russia Governor Elvira Nabiullina repeatedly cited deterioration in trade as the main reason for the Russian Rouble slipping.

Yet, Oreshkin said in an op-ed for the TASS news agency that the Kremlin is looking for a strong rouble and expects the situation to normalise shortly, Reuters reported.

An intervention would require the central bank to either buy the rouble off the market or issue an immediate interest rate hike ahead of its next scheduled policy meeting on September 15.

“The main source of rouble weakening and accelerating inflation is soft monetary policy,” Oreshkin wrote.

President Vladimir Putin’s current economic advisor and former minister of economic development Maxim Oreshkin blamed the central bank’s loose policy as the Russian Rouble slips – Shutterstock

The Bank of Russia hiked interest rates by 100 basis points in July to 8.5 percent, but seems to be poised for a series of hikes to offset the decline before the Russian Rouble slips further.

“The central bank has all the tools to normalise the situation in the near future and ensure that lending rates are reduced to sustainable levels.”

“A weak rouble complicates the economy’s structural transformation and negatively affects the population’s real incomes,” he added.

“It is in the interests of the Russian economy to have a strong rouble,” Putin’s advisor underlined.