Russia’s ruble dropped this week to its lowest rate against the dollar since right after the beginning of its Special Military Operation against Ukraine in early 2022. According to numerous media accounts, including The Guardian, the ruble hit 110 against the dollar on Nov. 27. “The latest drop came just days after the US introduced sanctions against Gazprombank, Russia’s third-largest bank, which played a key role in processing payments for the remaining Russian natural gas exports to Europe,” The Guardian noted.
The ruble has now dropped by almost 25% since August. This situation, Reuters reported “is compounded by an over 20% fall in the stock market so far this year as investors shift their savings from stocks to deposits, which offer interest above the central bank’s benchmark rate of 21%.” The Bank of Russia has responded to the pressure against the ruble over the recent period with standard monetarist measures, such as raising interest rates, which have done little to stem the capital flight and only succeeded in raising inflation while limiting credit for domestic production.
On Nov. 27, the Bank of Russia finally announced that it will suspend purchases of foreign currency on the domestic exchange from Nov. 28 until the end of the year, in an effort to reduce market volatility, RT reported. A decision on when to resume foreign currency purchases will be based on “the situation on the financial markets,” the central bank stated. RT noted that “the Bank of Russia took a similar step last year in the wake of Western sanctions, suspending dollar purchases from August 10 until the end of the year to stop the sharp weakening of the ruble.”
Prominent Russian economist Sergey Glazyev commented on his Telegram channel, “Glazyev for Thinking People,” on Nov. 27:
“The Central Bank is to blame for the collapse of the ruble exchange rate because: It has effectively cancelled the mandatory sale of foreign currency proceeds by exporters; It allows banks to buy up foreign currency for speculative purposes, rather than freezing their currency positions; It sabotages the creation of a market for the currencies of friendly countries; It continues to quote not the ruble, but the dollar and the euro; and so on and so forth, while still adhering to recommendations from Washington.”
