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HomeEconomyThe Ruble Collapsed in Anticipation of an Even Worse Scenario

The Ruble Collapsed in Anticipation of an Even Worse Scenario

Date: March 29, 2024 Time: 21:02:55

The Introduction of a Ceiling on Oil Prices is Not the Main Reason for the Depreciation of the National Currency

As of December 8th, Russia has seen its currency drop by more than 10% in just a few days. This affects the entire country of Russia and can even affect others across the globe. From May to November, Russia lived with a dollar exchange rate of about 60 rubles and had a dollar-euro parity. But now that page has been turned.

Most people are uncertain about what will happen when the ruble’s value takes a hit in this latest round of devaluation. However, if you look at who’s on the bottom line, money is being saved for Russian consumers and the government. The strength of the ruble comes from its key purchasing power, not the euro or any other foreign currency. Experts think that when the devaluation takes place, your purchasing power will be strengthened because it matches how expensive life’s necessities have become in Russia.

The dollar exchange rate on the Moscow Exchange rose, rising for the first time since mid-October. The figure broke above the 66 rubles mark, which last happened on July 6.

What did you think of the news coming out of Russia on December 5th? A new embargo was introduced which affected the energy market in some pretty unexpected ways.

A leading analyst predicted that the ruble will weaken as foreign exchange earnings from oil sales decrease. Because of this, new restrictions on the cost of Russia’s oil won’t kick in until January 2023. On a brighter note, however, BP believes that because oil is sold to countries at a higher price point than $60–giving Russia more profit – the ruble will actually strengthen because of it.

Economists in Russia predict that after the release of new tax regulations, the ruble may weaken to 65-75 RUB. Assuming that the exchange rate will remain stable, the U.S. dollar will reach 10% of its US value.

The reason for the weakening of the domestic currency may also be the situation with oil in general, which is not related to recent anti-Russian sanctions. “The main reason for the weakening of the ruble is the fall in oil prices below $80 per barrel, which is a psychological threshold,” said Natalia Milchakova of Freedom Finance Global. “Thus, this price level reflects pessimistic expectations about Russia’s economy, and is likely to cause an even stronger reaction from investors.” Meanwhile, not only is the dollar strengthening against the red ruble but also those of developing countries after the release of strong macroeconomic data in America and Europe. With the easing of anti-covid restrictions by China, along with speculation that it will cut interest rates soon, yuan values are rising against Russian rubles. Contrary to popular belief, this doesn’t seem to affect Russian trade severely. It seems like world markets fear that despite all restrictions imposed by Russia.

In many ways, the 51-week high of the dollar and the euro were against the ruble when the Russian Central Bank decided to intervene. However, according to Professor Mifune, it is more likely for a move back towards 57-59 rubles per dollar and 56-58 rubles per euro than a move towards 71 rubles per dollar.

As the Central Bank of Russia decides on a key rate, the ruble’s reaction may depend on how the Central Bank makes its decision.

Ruble value may be affected by the tax season, which usually suspends the strengthening of other world reserve currencies. In light of this, there is no positive news to report in the short term. However, oil is falling and dollar-euro rates may continue to rise, so don’t invest all your money in just one currency. Dollar-euro rates may reach 63.5 rubles sometime in the next few weeks, and 67-68 rubles for the euro.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Kevin Kennedy
Kevin Kennedy
Kevin Kennedy is an associate editor for ePrimefeed covering latest news, economy and movie.
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