Rubel falls at a record low: What does that mean for Russia?

Rubel falls at a record low: What does that mean for Russia?

The Russian ruble crashes - a dramatic decline that shakes the financial world! For the first time since the invasion of Ukraine, the ruble fell to over 110 rubles per US dollar on Wednesday. This has been marking the lowest level for more than 32 months, as the Russian news agency Ria Novosti reports. The economic turbulence is a direct result of the geopolitical tensions and new US sanctions that further put pressure on the ruble.

But that's not all! The ruble also broke the 15 mark in the trade with Yuan Chinese-another alarming sign of the Russian economy. The stock markets are also affected, with a decline of over 20 percent this year, since investors flee to safe deposits. Analysts from BCS describe the situation as "panic" and are eagerly awaiting the reaction of the tax authorities for this dramatic devaluation.

The reaction of the tax authorities

Analysts like Sofya Donets from T-Bank warn that the authorities may be forced to take measures to stabilize the situation. This could include increased foreign exchange sales of the central bank and additional capital controls. While some experts predict that the ruble could fall to $ 115 to 129 to 129 to 129, the Russian finance minister remains optimistic and sees the devaluation as "very beneficial for exports".

But the dark side cannot be overlooked: a weak ruble means higher prices for imported goods and could further heat the already high inflation in the country. The new sanctions have significantly disrupted payment transactions abroad, especially in the oil and gas sector, which leads to an acute lack of foreign exchange on the Russian market. Most major Russian banks are affected by US sanctions and cannot carry out dollar transactions, which also exacerbates the situation.