Rouble falls as Russian inflation and interest rates rise

The Russian rouble has lost a third of its value since August, hitting 114 against the dollar for the first time since March 2022. Before Russia’s full-scale invasion, the rouble traded at around 75 against the dollar.

Its recent decline is due to US sanctions against Russian banks including the state-owned Gazprombank, which is the main conduit for processing payments for Russian gas exports to Europe.

The Russian economy is showing signs of stagflation – a combination of stagnation (low growth) and high inflation, experts say. While a weak currency is good for exporters, the domestic picture isn’t pretty.

Inflation could climb to 8.5 per cent this year – twice as much as Russia’s central bank predicted, while the borscht index, which measures the cost of ingredients for the popular soup, rose 20 per cent compared with 2023.

So did the interest rate, hitting 21 per cent – the highest in more than 20 years.