On Monday, the Russian rouble experienced an exchange rate of 101.04 against the United States dollar. As the rouble depreciates, taking more of it to buy a single US dollar, this is commonly seen as a sign that the currency is getting weaker and unable to match the global power of the US dollar.
The rouble has been on a downward trend for the past few weeks due to several different pressures. The global economy has taken a hit due to the pandemic, which has caused investors to move away from riskier assets towards those that are more stable. As a result, the rouble is taking a tumble against many different world currencies.
At the same time, Russia is dealing with low prices for its key export, oil, as well as US sanctions, which means that its economic growth is unlikely to pick up any time soon. In addition, coronavirus restrictions in the country have meant that many businesses have had to close, making it difficult for the government to collect taxes and reduce its budget deficit.
In response to the situation, the Russian Central Bank has been intervening in the foreign exchange market to try and control the exchange rate of the rouble against the US dollar and other international currencies. This has not been particularly successful, however, as the demand for the dollar remains high, regardless of the intervention of the Central Bank.
Analysts suggest that the rouble may remain weak over the next few weeks, with some predicting that the currency could reach a rate of 110 roubles per US dollar in the near future. While this would be bad news for the Russian economy, it could also mean opportunities for foreigners to buy up rouble-based assets at a cheaper price.
While the immediate outlook for the Russian rouble looks bleak, some hope that over the longer-term the currency could rebound as the global economy continues to recover from the pandemic. This would likely involve taking further steps to stabilise the currency such as reducing the budget deficit, increasing foreign direct investment, and improving the country’s business environment. In the meantime, the value of the rouble looks to remain dependent on the actions of the Central Bank.