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4 Jul, 2023 15:25

Russian Central Bank explains ruble’s slide

Changes in the balance of trade have weakened the currency, the regulator says
Russian Central Bank explains ruble’s slide

The latest weakening of the ruble poses no threat to the country’s financial stability, a top official at the Russian Central Bank said on Tuesday.

The ruble decline is due to changes in the balance of trade, First Deputy Chairman Ksenia Yudaeva said, as cited by RIA Novosti news agency. The balance of trade is the difference between the monetary value of a country's imports and exports.

The ruble slid beyond 90 against the US dollar during trade on Tuesday, a level last seen in March 2022.

The Russian currency traded at 90.04 to the dollar at 14:33 Moscow time before gaining slightly, according to data from the Moscow Stock Exchange. The euro traded at over 98 rubles, also the weakest level since March 2022.

Yudaeva noted that the regulator saw no reason to reintroduce the mandatory sale of a share of forex earnings by exporters, a measure that was temporarily introduced last year in response to Western sanctions over the Ukraine conflict.

Central Bank Deputy Chairman Aleksey Zabotkin said last week that ruble has been impacted by the declining prices of Russian exports.

The currency has sharply lost ground since the short-lived rebellion by the Wagner private military company. The group, led by Evgeny Prigozhin, launched an insurrection against Russia’s military leadership on June 23-24. Armed units seized a military headquarters in Rostov-on-Don, and some forces marched on Moscow. After failing to gain the support of the regular Russian army, Wagner aborted its advance on the capital and reached an agreement with the authorities.

The ruble has also been under pressure in recent weeks due to lower oil prices and Western sanctions, which limit foreign investment and restrict the currency supply from exporters.

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