How Much Value Has The Ruble Lost? The Rouble touched a record low of 110 to the dollar. Let's explore more in this article.
The Russian stock market remained closed and trading on bonds showed wide bid-ask spreads and little-to-no volume.
How Much Value Has The Ruble Lost?
The Rouble fell 4.5% to 106.02 against the dollar, earlier hitting 110.0, a record low. It has lost 30% of its value against the dollar since the start of the year. Against the euro, it shed 2.5% on Wednesday to finish the day at 115.40.
Why is the value of rubble falling?
There are three main factors that cause the Russian Ruble crisis.
Falling Oil Prices
Crude oil and natural gas have long been essential to Russia's economy. A significant percentage of its economy is based on commodities. More than two thirds of the country's total exports in 2013 were made up of crude oil and related products. That was more than half the government's total revenue.
But in 2014, the price of crude oil dropped by approximately 50% as a result of decreasing demand in Europe, Russia's largest market, and higher US supply. The Organization of Petroleum Exporting Countries (OPECdeclaration )'s in late 2014 that it would not reduce production to raise prices may have been the main cause of Russia's issues. Even if OPEC gradually reduced production, crude oil prices have yet to return to their previous highs.
Political Risks
The second concern Russia faces has to do with its foreign policy. After Russia invaded Ukraine in February 2014, the United States and the European Union issued a range of financial sanctions that made it difficult for Russian businesses to borrow for recovery abroad. to the country's alleged interference in the 2016 and 2017 presidential elections in the United States and Europe, as well as its military involvement in Syria and Ukraine.
Vladimir Putin, the president, admitted that the sanctions are hurting the economy. There are hints that these sanctions may in the long run deter people from expanding their families. The long-term implications of this might be disastrous.
Russian Treasury holdings decreased from $96 billion in March 2018 to $14 billion in May 2018 as a result of concerns that US sanctions will cause a significant amount of the country's foreign reserves to be frozen.
Dollar Debt
The third issue is Russia's debt, which is denominated in dollars. Over $11.1 billion in debt in rubles and $62.4 billion (rubles) in debt in dollars were held by the country at the beginning of 2017. In order to pay off its debt in dollars , it would probably have to pay more in rubles.
How Much Value Has The Ruble Lost? Why Is The Value Of Ruble Falling? - Hopefully, this article can help you to understand it better.
