For the first time in the post-Soviet period the rouble has been falling in value against other currencies at a time when the price of oil has risen. Russia has long been very heavily dependent upon the export of energy (oil and gas) for foreign exchange at around two-thirds of its income in dollars. Nezavisimaya gazeta blames this on the financial authorities’ complacent encouragement to those exporting assets at a time when the standard of living is falling. This set of priorities did not change with the war against Ukraine. As the newspaper argues: “The Ministry of Finance explains the new devaluation of the rouble by capital flight from the country. And the Central Bank promises to further relax capital controls.” Meanwhile, it says, officials claim all this is nothing unusual. “However, it has been a long time since anyone in government or at the Central Bank ever expected such a drop in the rouble.” It now trades at 80 to the dollar. The fall in March 2020 was due to the drop in the oil price. Since allowing the currency to float in 2014 (following economic sanctions after seizure of the Crimea) Russia has had to cope with a volatile exchange rate, which is scarcely compatible with the aim of the Central Bank to achieve low and stable inflation to enable necessary economic reconstruction. The impact of all this on standards of living is obvious at a time when military expenditure and more attention to social welfare have been highlighted as the immediate priority. It is worth noting that this news comes from the mainstream press and not the financial papers yesterday.
Nezavisimaya gazeta
09.04.2023 20:15:00
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Through Russian Eyes 