By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
AmextaFinanceAmextaFinance
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Notification Show More
Aa
AmextaFinanceAmextaFinance
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
AmextaFinance > Markets > Forex > Kremlin blames loose monetary policy as rouble slides past 101 vs dollar
Forex

Kremlin blames loose monetary policy as rouble slides past 101 vs dollar

News Room
Last updated: 2023/08/14 at 5:54 AM
By News Room
Share
4 Min Read
SHARE

MOSCOW (Reuters) -President Vladimir Putin’s economic adviser rebuked the central bank on Monday as the rouble slid past 101 per U.S. dollar, blaming its 30% year-to-date slump on loose monetary policy and revealing growing discord among Russia’s monetary authorities.

The rouble, which has lost around a quarter of its value against the dollar since Putin sent troops into Ukraine in February 2022, hit 101.04 per U.S. dollar, its weakest point in almost 17 months.

As the rouble tumbled, Putin’s economic adviser Maxim Oreshkin said in an op-ed for the TASS news agency that the Kremlin wanted a strong rouble and expected a normalisation shortly, an intervention that could spur the central bank into action ahead of its next scheduled interest rate decision on Sept. 15.

“The main source of rouble weakening and accelerating inflation is soft monetary policy,” Oreshkin wrote. “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.

“A weak rouble complicates the economy’s structural transformation and negatively affects the population’s real incomes,” he said. “It is in the interests of the Russian economy to have a strong rouble.”

The Bank of Russia, which hiked rates by 100 basis points in July to 8.5%, has blamed the rouble’s sharp slide this year on Russia’s shrinking current account surplus – down 85% year-on-year in January-July.

On Monday, the bank said it saw no financial stability risks from the rouble’s weakening and gave another hawkish signal that a rate hike is possible soon.

‘DAMNING INDICTMENT’

The rouble has chartered a turbulent course since Russia invaded Ukraine, 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 around 75 to the dollar.

“The weaker rouble is a damning indictment of Russia’s war on Ukraine,” Timothy Ash, a London-based senior sovereign strategist at BlueBay Asset Management, said in an email.

“It is being driven not only by lower energy receipts due to the loss of the bulk of the European gas business but also by the success of the G7 oil price cap, the much higher cost of imports due to sanctions and then continued capital flight.”

To staunch the rouble’s slide, Russia could reintroduce tougher capital controls. Another option would be to raise interest rates, something the central bank is already minded to do given high inflation, but that limits economic growth potential and means higher borrowing rates for the government as it seeks to finance military operations in Ukraine.

Last week, Russia effectively abandoned its budget rule, with the central bank halting the finance ministry’s FX purchases to try and reduce volatility. Analysts widely agreed that those measures alone were too minimal in scope to significantly support the currency.

“The central bank is not fully in control,” independent Moscow-based economist Ian Melkumov told Reuters, although it has aggressive tools that it is currently reluctant to use.

He said the bank could hike rates drastically, as it did to 20% shortly after Russia began what it calls a “special military operation” in Ukraine. A move to even 15% would stop the rouble’s decline, he said.

“(But) the central bank doesn’t want to kill the economy and businesses in the same way it had to last year.”

Read the full article here

News Room August 14, 2023 August 14, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
Samsung profits take big hit from US chip controls and AI memory shortfalls

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

Brics nations hit back at ‘emperor’ Donald Trump over tariff threats

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

Holding your nerve in Donald Trump’s tariff maelstrom

Writing this newsletter used to have a predictable process. I would get…

Trump administration denies staff shortages hampered Texas flood alert

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

Tesla earnings: Q1 results fall short, Musk says he will spend less time on DOGE

Watch full video on YouTube

- Advertisement -
Ad imageAd image

You Might Also Like

Forex

Thailand’s weakening baht not all bad for economy – PM

By News Room
Forex

Sterling hits multi-month low, Fed holds rates steady amid inflation concerns

By News Room
Forex

Dollar index on verge of forming bullish ‘golden cross’ – BofA

By News Room
Forex

Japan warns against post-Fed yen slide

By News Room
Forex

Asian currencies stumble amid rising U.S. dollar and hawkish Federal Reserve stance

By News Room
Forex

Asian currencies under pressure due to Federal Reserve’s stance, says HSBC

By News Room
Forex

Dollar rallies, yen under pressure ahead of BOJ rate decision

By News Room
Forex

Gambia’s dalasi remains Africa’s strongest currency amid tourism and remittance inflows

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

YOUR EMAIL HAS BEEN CONFIRMED.
THANK YOU!

Welcome Back!

Sign in to your account

Lost your password?