The collapse recorded by ruble in the last days it is a thermometer of great crisis that will hit Russiatoday supported by a war economy that stimulates employment and economic growth. A great patient who will soon reveal himself in all his drama. And this is because at a certain point it will be necessary to ask end to hostilitiesto curb military spending, and reconvert industry, currently entirely focused on the production of armaments. A situation that will push Russia into a very deep recession and which the currency is already pricing in.
The trend of the ruble
The ruble yesterday hit a low not seen since March 2022, when the war in Ukraine began. The dollar reached a high against the ruble above 113losing 11% in just one week, to then settle today at 108. Since the beginning of the year, the greenback has maintained a 21% rise against the Russian currency, but the difference is even more striking if we consider that, before the he beginning of the conflict in Ukraine, in March 2022, one dollar was quoted around 75-80 rubles.
Same goes for the exchange rate of the euro against the rublewhich is attested at 114.65, maintaining an increase of just under 19% since the beginning of the year, while the exchange rate pound/ruble changes hands at 137.44with an advantage of more than 21% since the beginning of the year. The yen/ruble cross was less brilliant at 0.72 (+14% since the beginning of the year).
The latest US sanctions
The last blow to the Russian currency was contributed byand latest sanctions imposed by the United States, which hit Gazprombankthe last bastion of an economy still open to foreign countries. In fact, the Russian bank was entrusted with the task, now precluded, of regulating transactions with Western countries that still used Russian gas. So, all communication channels between Moscow and the rest of the world have been closedleaving the country isolated and exposed to an unprecedented crisis.
The reality of the facts: skyrocketing inflation
Russia is crossing one of the most tragic phases of its historyat least from an economic point of view, since it is devoured by galloping inflation, but economic growth is inflated by the state of war, because without the production of weapons, the Russian economy would be in full recession. A hypothesis that configures a state of stagflation very difficult to manage by the Russian central bank.
Inflation is now skyrocketingbut official data do not indicate such a critical situation. According to a typical Russian indexthe Russian salad indexwhich summarizes the price trend of the products used to cook this typical Christmas dish, was reached 70% growth. A trend never seen before which signals a strong growth in the prices of the most common products, but “official” inflation recorded by the statistics office would signal growth of 8%, absolutely far from realitywhile unofficially there is talk of a growth of 30-40%.
A (non-atomic) “bomb” ready to explode
A growth that has forced the central bank to raise rates to 21%, a level not yet sufficient to contain the price trend. A rigorous policy carried out by the governor Elvira Nabiulinawhich plans to raise them further, up to 23%but is strongly opposed by Russian leaders, who continue to deny the criticality of the situation.
A bomb ready to explodeas soon as the war economy has reached its end and the Kremlin will no longer be able to support military expenses which are around 30-40% of the public budget.
