The Russian ruble is in freefall, plummeting to its lowest levels since the early days of the Ukraine war. This sharp decline has sparked worries that the currency could soon become a target for speculative attacks, further destabilizing Russia’s already shaky economy.
On Nov. 27, the ruble tumbled past 110 to the U.S. dollar. This was a loss of one-third of its value since August. Why? Experts say there are several reasons, including sanctions imposed by the U.S., an overheated economy, and high inflation. In response, Russia’s central bank announced it would halt foreign currency purchases until the end of the year and increase its daily yuan sales to shore up the ruble, Fortune reports.
The fall is partly tied to U.S. sanctions against Gazprombank, which has played a critical role in facilitating Russia’s energy trade. The sanctions have disrupted the flow of foreign currency into Russia, creating liquidity shortages. Dmitry Pyanov, deputy CEO of VTB, blamed the sanctions for the ruble’s instability and called for urgent intervention to stabilize the market, according to Reuters.
Inflation remains stubbornly high, with annual rates exceeding 8% and key goods like potatoes and butter nearly doubling in price over the past year. To combat inflation, the central bank raised interest rates to 21%—the highest level since 2003, Fortune reports.
Analysts warn that without stronger measures, such as mandating exporters to sell more foreign currency, the ruble’s decline will persist. Speculators may see this as an opportunity, potentially worsening market volatility.
