“Concerning for pensioners” Muscovites groan under the weak ruble
8/11/2023 8:28 am
Western sanctions, falling oil revenues and rising inflation are leaving their mark. While Kremlin boss Putin calls on the population to be patient, people are feeling the effects of Russia’s war of aggression. A family man now has to pay twice as much for an evening meal as before.
Igor Inkin, 63 years old and now retired, renounces desserts and other small pleasures in life. “Prices in stores are going up and we have to adjust our spending,” says the former entrepreneur. He is in the center of Moscow and is beginning to find this development “disturbing”. A year and a half of western sanctions and falling oil revenues have left their mark.
The ruble has been weak for months and has lost value again due to the uprising of the Wagner mercenary group at the end of June. On Thursday, 107 rubles were traded for one euro and 97 rubles for one dollar – the lowest value for the Russian currency since spring 2022. This makes imports more expensive. Inflation is rising, prompting the country’s central bank to raise interest rates sharply recently.
Inkin has experienced some ups and downs in his country’s economy: the shortages during the Soviet era, the chaos of the 1990 reunification, the economic crisis of 1998, which devoured the savings of Russians. Now he’s worried again about making ends meet. “For us pensioners, it’s particularly worrying.” Many work part-time anyway to supplement their pensions.
Moscow must “negotiate” on sanctions
With the younger ones, however, it sounds no different. Dmitri Bobrov, 19 years old and self-employed in IT, struggles to get the necessary parts for his work. “Graphics cards, processors… the prices have increased significantly.” Because of the western sanctions due to the Russian war of aggression, local companies can no longer procure the necessary products so easily and are dependent on so-called parallel imports – i.e. imports via another country. Fyodor Tikhonov, 37 years old and working in the film industry, also notices this when shopping for everyday things. He used to be able to buy dinner for his family for 1,000 rubles. “Today it costs 2,000 rubles,” he says as he exits a grocery store. Moscow urgently needs to “negotiate” about the sanctions, he says. “This can’t go on forever.”
Another sign of Russian concern was a run on their savings: Between June 23 and 25, because of the Wagner riots, they withdrew a billion rubles (almost 9.4 million euros), about five times as much much like the normal three day average. “The fall of the ruble was expected,” says analyst Arnaud Dubien, “it reflects foreign trade.” On the other hand, it was unusual that the ruble would continue to weaken despite rising oil prices.
Kremlin chief Vladimir Putin is giving the message that the country will weather this slump. The Russian leadership sees in the sanctions and the exodus of Western companies a historic opportunity to strengthen domestic companies, for products “Made in Russia” and to create new jobs in the country. “People should save, be patient and wait for this to pass,” said 18-year-old student Xenia Sushkova. It’s about being “independent”, not dependent on other countries.