Ruble's Decline Strains Russian Economy

The recent crash of the ruble has placed significant pressure on Russia's economy, prompting swift actions from the central bank. In response to the steep decline, the central bank has halted foreign exchange purchases, a move that affects inflation and the middle class. The decline is further exacerbated by US sanctions against Gazprombank and changes in export revenue conversion policies.

Finance Minister Anton Siluanov notes potential benefits for exporters and budget management, yet the situation remains dire. Analysts describe the market's response as 'panic' amid a shortage of foreign currency and escalating geopolitical tensions.

In light of these challenges, the central bank is considering raising interest rates, with suggestions of a potential increase to 23%. This measure aims to curb inflation, which officially stands at 8.5%, though consumers report even higher increases, particularly in electronics and consumer goods.

While the ruble's decline benefits some sectors, such as the state-dependent defense industry, the broader economic impact is concerning. Analysts predict a further drop in the ruble's value, potentially reaching 115-120 per dollar by year-end, prompting expectations for mandated currency sales by exporters.