The ruble exchange rate continues to weaken and is approaching the 100 per dollar mark, but the Russian authorities probably do not intend to take emergency measures to stabilize it, Bloomberg writes. The ruble has also weakened against the yuan, which has become the main alternative to Western currencies. Since May 2023, the ruble has fallen 11% against the Chinese currency.
According to two Bloomberg sources, officials believe the ruble’s decline could help the state budget, given the increased spending on the war with Ukraine. The ruble has already crossed the 100 per dollar mark twice in 2022, forcing the Central Bank to raise its key interest rate and introduce strict measures to control exporters’ foreign currency earnings. Now the government plans to weaken the currency, which is reflected in the forecasts of the Ministry of Economic Development, according to which in 2025 the rate of 96.5 rubles per dollar is expected. A weaker ruble is beneficial for the budget, as it increases export revenues in rubles. Oleg Vyugin, former deputy chairman of the Bank of Russia, noted that the figure of “100 rubles per dollar is not terrible,” although such a rate will have a certain inflationary effect.
The recent weakening of the ruble reflects the difficulties with foreign trade payments faced by importers and exporters. Following the tightening of U.S. sanctions in June 2023, companies faced problems transferring proceeds in foreign currency from China and Turkey. In response, the government relaxed measures on mandatory conversion of export proceeds: from 50% to 25%. According to the Bank of Russia, in September, currency sales by Russia’s largest exporters dropped by 30% compared to the previous month, as an increasing proportion of settlements are made in rubles.
