[Russian ruble, photo credit: pixabay.com]
Since its major plunge in early March due to sanctions issued by the United States, the European Union and the U.K, the Russian ruble has rebounded to pre-war levels. However, whether it can stabilize Russia’s economy is uncertain.
Amid the Russia-Ukraine war, the ruble’s rise in price reflects Russia's efforts to revive its economy, which may deteriorate once again.
On February 24th of 2022, Russia launched a full-scale invasion of Ukraine sending thousands of troops to Kyiv, the capital of Ukraine. Western countries sent aid and issued sanctions on Russia, which slumped Russia’s economy.
Following the West’s economic blockade, the Russian ruble hit a record low: 0.0072 dollars per ruble. However, ongoing purchases of Russian energy and efforts from leaders resulted in the ruble’s recovery.
After approximately two weeks of holding a value of less than a cent, the ruble has recovered to pre-war levels despite severe sanctions and the United States’ efforts to reduce reliance on Russian natural gas: European countries continued relying on Russian oil as their energy source as Russia is the third largest oil producer.
In response to the West’s harsh sanctions, Russia imposed counter-sanctions demanding payment for natural gas in rubles instead of dollars or euros. This decree enforced the ruble to recover its value.
This ruble payment system may help Russia’s economy to become more resilient to inflation.
However, since its economy was slammed by sanctions, Russia will not be able to get its hopes up about stabilizing the economy as long as Russian troops remain in Ukraine.
Reports from a study show that Russia is likely to lose more than $20 billion per day due to the cost of war.
Powerful Oligarchs, Russian Billionaires with political ties, have assets worth millions frozen in foreign banks.
The U.S. and its allies cut off Russia from the global economy and many corporates have temporarily curtailed operations in Russia.
Following devastating economic repercussions and disastrous costs of war, the future of the Russian economy as well as the economy of countries that heavily rely on relations between Russia and Ukraine are uncertain.
Russia’s status quo shows its foreign relations and the consequences nations face for damaging the relations: oil prices skyrocket as Russian oil is limited, Russia faces an internal crisis with its economy, and Ukraine reports dreadful losses due to war.
The ruble may help Russia overcome its current financial crisis, however, in the long run, when the power of Russia’s opponents is bolstered, Russia’s deepest recession would ensue.
Fayston Preparatory School
Elliott Lee email@example.com
<Copyright © The Herald Insight, All rights reseverd.>