Russian Rouble Drops Against Dollar to 100.25

The Russian currency fell close to 100 rubles against the dollar again, briefly surpassing an important psychological marker for Russian consumers and the government, after previous efforts by monetary policymakers failed to stop the currency’s decline.

The Russian ruble fell 0.5% to 100.255 against the dollar, before trading at 99.94 against the greenback in Moscow on Tuesday.

Putin confirms his confidence in the ruble and supports the decisions of the Bank of Russia

This drop brought the ruble back to the threshold that led to an emergency rate hike in August, and sparked heated discussions about possible measures to control capital to boost the currency. Disagreements from the Kremlin and the Russian central bank over how best to boost the ruble have come to light.

Monetary policy in the face of capital controls

Russia’s central bank governor, Elvira Nabiullina, warned against using administrative measures to support the exchange rate, rather opting to rely on monetary policy. Russia’s central bank raised its key interest rate to 12% from 8.5% in an emergency meeting in August after the dollar breached the 100-ruble barrier, increasing it by another percentage point to 13% last month.

August’s rate hike was the sharpest since the period immediately following the Russian invasion of Ukraine in February 2022.