Rout in the Russian rouble

The Central Bank of Russia has been forced to intervene to prop up the collapsing currency.

"Even by the standards of emerging market currency meltdowns, the rouble's gyrations have been extreme," said the Financial Times. Less than a fortnight ago, 52 roubles were needed to buy a US dollar; by last Tuesday you needed 70-80, despite a huge 6.5% overnight interest-rate hike by the central bank to stop capital flooding out of Russia.

It bounced back on Wednesday as the Russian central bank outlined plans to help ease pressure on the banking system, although the rouble remained above the 60 mark.

What the commentators said

Higher interest rates designed to stop capital flight are simply squeezing the economy, while the jump in inflation, already at 9%, is eroding real incomes. As the currency rout intensifies, "a lethal combination of deep recession and runaway inflation" becomes more likely, said The Economist.

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A key problem is Russia's external debt of around $614bn, and it is becoming increasingly hard to borrow abroad thanks to the sanctions.


Russia could impose capital controls. But this would be "a deeply unpopular and retrograde step" for a government that worked so hard to boost confidence in the rouble in the 2000s, said the FT. Only a loosening of Western sanctions or sharply higher oil prices, said Pierre Briancon on, can stem the tide now.

Andrew Van Sickle

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.