The Russian rouble has dropped to its weakest point in almost 17 months, as the country’s economy suffers amid its war with Ukraine.
The rouble slid past 100 per US dollar on Monday - meaning it has lost about a quarter of its value against the dollar since President Vladimir Putin sent troops into Ukraine last February.
It came as Putin’s economic advisor Maxim Oreshkin blamed the Russian currency’s weakening on loose monetary policy.
Mr Oreshkin said in an op-ed for the Russian state-owned news agency TASS news that the Kremlin wanted a strong rouble and expected a normalisation shortly.
“The current exchange rate has deviated significantly from fundamental levels, and its normalisation is expected in the near future,” he wrote.
“A weak rouble complicates the economy’s structural transformation and negatively affects the population’s real incomes. It is in the interests of the Russian economy to have a strong rouble.”
The rouble has chartered a turbulent course since Russia invaded Ukraine nearly 18 months ago, slumping to a record low of 120 against the dollar in March last year before recovering to a more than seven-year high a few months later, supported by capital controls and surging export revenues.
Before the war, the rouble traded at roughly 75 to the dollar.
The Bank of Russia has blamed the rouble’s sharp slide this year - it has lost around 30 per cent against the dollar - on Russia’s shrinking balance of trade. The country’s current account surplus was down 85 per cent year-on-year in January-July.
Mr Oreshkin put the blame squarely at the central bank’s door, a sign of discord among Russia‘s monetary policy authorities.
“The main source of rouble weakening and accelerating inflation is soft monetary policy,” Mr Oreshkin said. “The central bank has all the tools to normalise the situation in the near future and ensure that lending rates are reduced to sustainable levels.”
The central bank hiked rates by 100 basis points in July to 8.5 per cent, having held them steady since September. Ahead of its next meeting in September, the bank has been signalling that more hikes are needed.
