Russian President Vladimir Putin (left) and Wagner boss Yevgeny Prigozhin. GAVRIIL GRIGOROV/SPUTNIK/AFP via Getty Images; Mikhail Svetlov/Getty Images
The Russian ruble fell as much as three percent on Thursday.
One reason is rumors that the head of the Wagner mercenary group, Yevgeny Prigozhin, is back in Russia.
The Russian central bank, on the other hand, cites rising imports from Russia as the reason.
The ailing ruble continued its downward trend on Thursday. One reason given by market participants was rumors that the head of the Wagner Uprising mercenary group, Yevgeny Prigozhin, was back in Russia. After his failed uprising, he went into exile in Belarus.
The ruble fell as much as three percent, hitting its lowest level since March. He thus expanded his losses in the current year to 25 percent. The chart shows that the ruble initially plummeted following Russia’s attack on Ukraine. In the months that followed, the ruble actually rose sharply as a result of rising energy prices. It has now fallen below pre-war levels.
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The June 24 Wagner uprising ended with a deal exiling Wagner boss Yevgeny Prigozhin to Belarus. Belarusian President Alexander Lukashenko told reporters that Prigozhin had returned to Russia.
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After the Wagner uprising, the Russian ruble continues to slide
He added: It is unclear whether parts of the Wagner fighters would come to Belarus. That was another agreement after the uprising. Lukashenko said it was a decision made by Moscow. Prigozhin could thus rekindle doubts about the stability of the regime of Russian President Vladimir Putin.
The continuing uncertainty and the economic consequences of the Ukraine war are putting the ruble under severe pressure. On Wednesday, more than 90 rubles per US dollar had to be paid again for the first time.
Among other things, Russia is trying to support the ruble with capital controls. It also requires trading partners to conduct large parts of their business in rubles or their national currencies, rather than in US dollars. The ruble is also depreciating sharply against the euro.
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Demand for foreign currencies increased
When mercenary troops marched on Moscow at the end of June, Russian demand for foreign currency skyrocketed. So Russians sold rubles, which caused the rate to fall.
The governor of the Russian central bank, Elvira Nabiullina, gave another reason for the poor exchange rate of the ruble. According to her, shifts in the country’s trade balance are the main reason for the ruble’s deterioration as import demand increases. The meanwhile strong ruble was also seen by economists as a consequence of the sanctions, since Russia was able to buy fewer goods abroad due to import restrictions. It also had to sell fewer rubles for other currencies at the time.
At a conference in St. Petersburg she said on Thursdaythe government have no reason to intervene. The state of the ruble does not pose a risk to financial stability.
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