The Russian ruble is still losing ground as global oil prices go on sliding. The situation with the Russian currency is casting a shadow over the forecasts concerning the country’s economic recovery. While the ruble is hitting new all-time lows, the European currency is climbing to new record highs. The official exchange rate of 83.44 rubles for one euro was set by the Bank of Russia on January 13th. Moreover, the central bank also raised the US dollar exchange rate to 76.6 rubles for one US dollar.
As a result, the Russian ruble has lost 20% over the last 12 months and about 60% over the last three years. A barrel of the benchmark Brent crude touched the record low around 30 US dollars. However, some experts noted that the Russian currency is dropping at a faster pace than oil prices thus leading to an expansion of the budget deficit.
The ruble’s depreciation has a dramatic effect on inflation that exceeds four times the official mid-term target set by the Bank of Russia. Experts anticipate a further decline of the Russian currency as oil prices will hardly advance above the level of 45 US dollars a barrel before the beginning of 2017. The Russian central bank is likely to resume monetary easing in one of the nearest meetings within the first quarter. However, the situation will mostly depend on consumer prices. In November, inflation hit 15% on a yearly basis. The Central Bank forecast it is going to 7% this year, which is still above its 4% target.
