One Russian ruble is currently worth 0.021 European euros, the lowest value the ruble has held since the euro was created.
The ruble has lost 8% of its value against the euro in just the first month of this year, and a whopping 20% of its value over the past twelve months.
While horrifying, these gigantic losses by the Russian national currency are deceptively understated: They would be much, much bigger if not for the Russian government pouring billions and billions of its foreign currency reserves, obtained from the sale of oil, into purchasing rubles in the currency market to artificially increase their value, blunting the brutal impact of consumer price inflation on imported goods in Russia.
The ruble, in other words, is back in free fall.
It seems like only yesterday that the Kremlin was arrogantly proclaiming its intentions to cease currency interventions and let the ruble float freely on the currency markets, proving that Putinomics had stabilized the Russian economy and given Russia a so-called “hard” currency that could rival those in the West. Oops! The Moscow Times reports: “Battling to restore confidence, Economic Development Minister Alexei Ulyukayev on Tuesday backpedaled on plans to free float the ruble by 2015, and the Central Bank on Thursday pledged unlimited interventions to keep the ruble firm.”
Oh well, back to the drawing board.
It’s hardly surprising to see the Russian ruble collapse when you know that Ulyukayev’s last major revelation was that the Russian economy has stalled out and entered a prolonged period of stagflation, with negligible economic growth accompanied by virulent price inflation, the worst of all possible economic worlds. Who would want the ruble under such circumstances? Certainly not Russians, who are heading for the financial exits and dumping rubles in favor of foreign hard currency, further driving down the ruble’s value.