This polar image distributed by the Sputnik Agency shows Russian President Vladimir Putin’s meeting with the governor of the Tver region at the Moscow Kremlin on August 9, 2023.
Mikhail Klimentev | AFP | Getty Images
The Russian ruble briefly rose $100 against the U.S. dollar on Monday, nearing a 17-month low, as President Vladimir Putin’s economic adviser blamed easy monetary policy for the rapid depreciation.
The ruble has lost about 30% against the dollar since the turn of the year. The Bank of Russia blames the country’s shrinking trade balance as Russia’s current account surplus fell 85% year-on-year from January to July.
By mid-afternoon in London, the ruble was trading just above 101 against the dollar. The Russian central bank later announced that it would hold an extraordinary interest rate meeting on Tuesday. In a statement, it said the meeting would be held “to discuss the issue of the policy interest rate level” and that the council’s decision would be announced at 10:30 a.m. Moscow time.
Putin’s economic adviser, Maxim Oreshkin, told Russia’s state news agency Tass that the depreciation of the currency and the acceleration of inflation were mainly due to “easy monetary policy” and that the central bank “has all the necessary instruments to normalize the situation in the world’. the near future.”
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“A weak ruble complicates the restructuring of the economy and negatively affects the real incomes of the population. For the sake of the Russian economy – a strong ruble,” he said, according to a Google translation.
The central bank on Thursday halted foreign currency purchases for the rest of the year in an effort to prop up the currency, fueling fears of rising inflation as Russia seeks to fundamentally transform its economy in the face of increasing isolation and punitive Western sanctions.
Russia’s GDP beat expectations to grow at an annual rate of 4.9% in the second quarter, new figures from the Federal State Statistics Service showed, recovering from a 1.8% contraction in the first quarter.
But William Jackson, chief emerging markets economist at Capital Economics, noted that limited slack in the economy is likely to further fuel inflationary pressures and result in a tightening of monetary policy, potentially weakening growth for the remainder of the year. year and until 2024.
“Perhaps the most important risk to the economy is that the administration loosens fiscal policy in support of the war effort, which would further exacerbate Russia’s economic vulnerability,” Jackson added.
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