(Moscow) – Russia’s Central Bank acknowledged on Friday that the ruble had experienced a temporary dip due to sanctions imposed by the United States, but reassured the public that the measures it had put in place would help the currency recover.
The sanctions, which were applied to Gazprombank—the primary bank facilitating Russia’s energy transactions—and 51 other financial institutions last week, resulted in the ruble plummeting to a two-year low of nearly 115 rubles to the U.S. dollar earlier this week. This sharp drop in value sparked concerns about the stability of Russia’s economy.
During a press briefing on Friday, Philipp Gabunia, Deputy Chair of the Central Bank, addressed the situation, explaining that the current volatility in the ruble’s value was a result of short-term disruptions caused by the sanctions. He stressed that the fluctuations in currency supply were temporary and that such events were not uncommon in times of sanctions or financial instability.
Gabunia stated, “What we’ve seen in the past week is a very short period,” acknowledging that while the sanctions had caused market imbalances, the effects were not expected to last long. He added that the measures the Central Bank had taken were sufficient to manage the situation.
By Friday afternoon, the ruble had gained some ground, rising to 105 rubles to the dollar on foreign exchange markets. This recovery followed the announcement by the Central Bank that it would halt its foreign currency purchases in the domestic market until the end of 2024, while continuing to sell foreign currencies. This move was intended to limit the excess supply of foreign currency, thereby reducing pressure on the ruble.
Gabunia emphasized that the decision to refrain from buying foreign currency was part of a broader strategy to stabilize the currency and address the temporary volatility. “We see signs that the situation is stabilizing,” he said. The Central Bank’s actions were aimed at limiting any further risk to the economy, with Gabunia confident that there were no immediate threats to financial stability.
The Central Bank also pointed to the high interest rate of 21% as a key factor in reducing demand for foreign currencies. By keeping interest rates at such a high level, the Central Bank hopes to make ruble-denominated assets more attractive to investors, which could further support the ruble’s value. The goal is to balance the foreign exchange market without needing to implement emergency measures.
As of Friday, the Central Bank’s official exchange rate stood at 109.57 rubles to the dollar and 116.14 rubles to the euro. Despite the recent volatility, the Russian government appears confident in its ability to manage the ruble’s fluctuations and prevent further financial instability.
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