Russia’s ruble has hit its lowest level since the early days of the Ukraine war
Russia’s central bank has halted purchases of foreign currencies in response.
The Russian ruble has plummeted to its weakest level since early 2022, trading at over 114 to the US dollar at one point yesterday — following a drop of over 7% on Wednesday and a 20% decline this year. (The currency traded at around 75-80 to the USD before the war.) The sharp drop in the currency, which is often managed by Russian authorities because of its status as an indicator of the health of the country’s economy, now means that 1,000 rubles buys fewer than $10.
The collapse partly stems from last week’s US Treasury sanctions, which banned Russia’s third-largest lender, Gazprombank — along with over 50 smaller banks — from handling energy-related transactions with US entities. Per Barron’s, wider fears about a sharp escalation of the war in Ukraine have also stoked the ruble’s decline.
Gazprombank has been central to Russia’s energy export payments since March 2022, when Putin required “unfriendly” countries, including the US and EU, to pay for Russian gas in rubles (instead of dollars or euros) via the bank to prop up its currency, which had tumbled shortly after the war began due to Western sanctions.
In response to the ruble’s steep drop, Russia’s central bank announced yesterday it would halt foreign-currency purchases through the end of the year — an effort to reduce the supply of rubles in the market and thereby support its value. The ruble has since shown a slight recovery, trading at 108.5 as of Thursday, 12:40 p.m. GMT.
