Russian Ruble Bouncing from Lows: December 25, 2023

Russian Ruble, US Dollar, Russia, Central Bank, interest rates

In December, the value of the Russian ruble fell to about 92 against the US dollar. This drop happened as people investing in the market started to think that Russia’s central bank would stop increasing interest rates. The head of the bank had hinted at this in a statement. Recently, the Central Bank of Russia (CBR) raised its main interest rate by 100 basis points to 16%, the highest it’s been since April 2022. However, they also suggested they might not increase rates further. During a press conference, the head of the bank, Nabulina, mentioned that rate hikes could be done, leading investors to expect a rate cut by spring 2024.

Additionally, the ruble faced more pressure because there was less foreign currency coming in. This was because exporters were buying less foreign currency before the holiday season. Despite these challenges, the ruble did manage to bounce back a bit. It regained 8% of its value since it had dropped significantly in October. This recovery was helped by a weaker US dollar and the capital controls that had been put in place earlier.