Russia’s central bank chief Elvira Nabiullina braces herself against the fall of the Russian ruble. Sefa Karacan/Anadolu Agency via Getty Images
Russia is trying to prevent the ruble from falling further. The Russian central bank announced that it would stop all foreign exchange purchases by the end of 2023. It is also launching a digital ruble pilot program to shore up its currency.
Russia is tightening its emergency measures to stop the Russian ruble from falling. The Russian central bank is stopping its foreign exchange purchases and wants one digital ruble introduce.
Russia will stop buying foreign currencies on the world market by the end of the year, she said Central Bank on Wednesday. On the other hand, it will continue to buy rubles on the foreign exchange markets and sell foreign currency from its sovereign wealth fund worth up to 2.3 billion rubles or $23 million per day. Before the attack, Russia had deliberately built up large foreign exchange reserves in order to be prepared for the costs of the war and possible sanctions.
In a separate Explanation the central bank announced a pilot test for a digital version of the ruble. She had been planning this move since July. The test has now started with a limited number of customers in 13 banks. The Central Bank of Russia also wants to introduce the digital currency for public use by 2025.
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The Russian currency initially rose sharply after the start of the Ukraine war because Russia benefited from high energy prices. However, the ruble has been under pressure since the summer of 2022. For one, Russia’s earnings from exports of energy and other commodities are falling. On the other hand, the country is spending more money on imports again.
On Friday, the ruble slipped to more than 98 rubles per US dollar. This year alone, the ruble has lost about 30 percent against the dollar and also against the euro. Currently, more than 108 rubles have to be paid for one euro. Within twelve months, the ruble exchange rate even collapsed by about 70 percent.
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Above all, the weaker ruble makes imports to Russia more expensive, which the country depends on for its war machine, but also to supply the population. As a result, long-term low inflation in Russia has risen to over 3 percent. The central bank had already raised interest rates by a full percentage point to 8.5 percent in July. The rate hike should also make the ruble more attractive to investors. But the effect was completely gone.
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This article uses portions of text first published by Business Insider in the United States. You read the original here.
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