Ruble Balancing, Act III

In early August, the Russian currency fell to a value of one American cent, and the Russian government took action to bring the currency back to 94 to the dollar. Looking back at the trend in 2023, we saw a sharp decline in the value in December 2022, followed by a rebound in January, and then a slow but inexorable decline, hitting an all-time low in mid-August. I’m disregarding the inverted spike that happened immediately after the invasion — that was quickly recovered. Since the meager six percent recovery in August, the decline has resumed, and it now sits at 98.47 to the dollar, up three percent since Monday, 4 September. Financial analysts, or the limited AI that writes their throwaway articles, at FXStreet, see the ruble at 120 to the dollar by the end of the year. They anticipate more interest rate hikes within Russia, which is at 12% already. High-interest rates discourage credit, meaning that businesses are less likely to expand, and consumers are less likely to make big purchases on credit. The use of credit in Russia is already less widespread than in the West — due to the unreliability of banks, high labor turnover, and general unpredictability of the Russian economy since 1991, consumers prefer to pay cash, even for cars and homes. This preference is far from iron-clad, though, and things were changing. The high price of foreign cars, thanks to sanction regimes, and the low quality of domestically produced autos may give consumers a reason to delay their spending until after the war. <a href="https://medium.com/@dylan_combellick/ruble-balancing-act-iii-d33912e7b591">Website</a>