The ruble’s depreciation poses no risks to Russia’s financial stability, the Bank of Russia’s (CBR) press service told Interfax news agency on Monday.
The Russian currency started the week with a decline to its lowest level versus the US dollar and the euro since March 2022, touching 101 against the American currency and 111 against the euro.
“Along with a significant reduction in the value of exports, there is an expansion in demand for imports associated with an active growth in domestic demand, including against the backdrop of high rates of lending while maintaining an increased level of government demand,” the CBR stated.
Last week, the regulator indicated that a key interest-rate hike is possible at its next meeting, scheduled for September 15. It increased the key rate to 8.5% per annum at its last meeting, on July 21, citing rising inflation. Prior to that the rate had remained unchanged for several consecutive meetings since last October.
CBR’s Deputy Chairman Aleksey Zabotkin told reporters on Friday that changes in the trade balance were weakening the ruble. “As for the dynamics of the exchange rate, we still believe that the decisive factor is what happens in terms of exports and imports of goods and services,” Zabotkin said.
Despite the ruble’s sharp depreciation, President Vladimir Putin’s economic adviser, Maksim Oreshkin, said on Monday he expects the Russian currency to stabilize, noting that the central bank “has all the tools” to normalize the situation in the near future.
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