The ruble hit a record low of 158 rubles per dollar in early March and closed at 53 rubles per dollar on the same day. Various media point out that the strong value of the ruble comes with a cost. This is because there is a concern that export competitiveness will decrease due to a surge in the value of the currency.
Russia’s Economy Minister Maxim Retenikov also warned that if this trend continues, domestic companies could suffer.
“If this situation continues for a few more months, many companies will have to reduce their investment processes and adjust their production plans,” he said.
He also expressed concern at a meeting of the Russian Federation of Businessmen on the same day, saying, “Consumers tend to save rather than consume, which could lead to deflation in June.”
A strong ruble could cost Russia’s budget by reducing gas and oil exports.
Liam Fitch, an analyst at Capital Economics, said, “The ruble is too strong for Russia,” adding, “The damage that the strong ruble will cause to the finances will probably make policymakers quite concerned.”
However, Western sanctions on Russia limit Russia’s ability to respond.
To stabilize the ruble, Russian Finance Minister Anton Siluanov announced at a meeting of the Russian Federation of Businessmen that he was discussing a plan to buy the so-called “friendly” currencies. It did not specify which countries’ currencies to buy.
The problem is that Russia cannot simply sell rubles and purchase dollars, Liam Fitch said. “I think we are trying to buy currencies from friendly countries because of sanctions against the Russian central bank’s holdings and transactions.”