The Russian rouble has plummeted to its lowest value against the US dollar since Russia’s full-scale invasion of Ukraine, Financial Times reports.
Impact of Failed Mutiny and Sanctions
The currency, which has lost a third of its value since December, traded at over RUB 90 per US dollar on Thursday. The failed insurrection by Yevgeny Prigozhin’s Wagner group and ongoing western sanctions have significantly pressured the Russian economy. “Last weekend’s political crisis prompted cash outflow from rouble to dollar and to foreign banks,” said Natalia Lavrova, chief economist at BCS Global Markets.
The Kremlin has acknowledged the currency’s drop, attributing it to “significant speculation” and reassuring the public that such fluctuations have occurred before and the currency has rebounded.
Trade Balance and Capital Outflows
Alexandra Prokopenko, a non-resident scholar at Carnegie Russia Eurasia center, noted that the decline reflects changes in the trade balance, with imports rebounding and exports falling. “The flow of money into Russia is drying up, and the outflow of capital is increasing. All this is a direct consequence of the sanctions,” Prokopenko said. Data from the Russian Central Bank shows that capital outflows have increased since the February 2022 invasion of Ukraine, with Russians moving more than $40bn in deposits outside the country.