The Russian ruble has never been the best currency but neither has been the worst. However, the situation has changed. More and more often the Russian national currency is mentioned alongside the biggest losers of the foreign exchange market.
It looks like actions adopted by the country’s government not only cap the growth of the currency but even artificially push it down. The weak ruble favors the government because the budget is mainly replenished by selling local natural resources abroad. Payments are carried out in US dollars and euros and, given the current exchange rate of the ruble, much more things can be bought in these foreign currencies. Such an approach led to the deepest slump in the Russian ruble against the US dollar over the first six months of 2018 among all post-Soviet national currencies. Statistics shows that the ruble sank by 8 percent in six months, which is the worst result among the post-Soviet states. The Russian currency fell even deeper than the Tajikistani somoni that dropped by 3.7 percent in the given period. The performance list of post-Soviet currencies was topped by the Ukrainian hryvnia (plus 6.7 percent), Georgian lari (plus 6 percent), and Moldovan leu (plus 1.57 percent). Experts link the ruble’s miserable fall to the US sanctions. Actually, all sanctions affect relations of Moscow with foreign investors. If investors plan to continue putting money in the post-Soviet territories, they are going to shift their attention to other countries from the list.
Given the fact that sanctions are likely to become only harsher, the Russian ruble has a very small chance of rising. In April, the US Department of Treasury revealed a new sanctions list with Russian businessmen, top managers, and officials. Once the limitations were introduced, Russia’s stock market collapsed and national currency hit new 18-month lows. And it seems there’s more to come.
