Five points What you need to know about the collapse of the Russian rouble

From the outside, the Russian economy appears to be doing well. But the weakness of the rouble is causing concern among the population. Find out the reasons and consequences in five points.

"The Russian economy is in a precarious situation at the moment," said Russia expert Ulrich Schmid in an interview with blue News on November 19. A few days later, it turns out that the professor from the University of St. Gallen is right. You can find all the important questions and answers here.

The rouble is collapsing: The Russian currency has lost almost a quarter of its value since the beginning of August. Experts agree that the reasons for this are the war in Ukraine and the resulting sanctions imposed by the West.

The slide of the rouble accelerated on November 27 after the Russian central bank announced that it would no longer buy foreign currency from Friday until the end of the year. This is intended to support the rouble because less of the currency is coming onto the market.

The exchange rate then fell more sharply than at any time since March 2022. One dollar sometimes fetched 113 roubles. In the summer, it was still between 80 and 90 roubles. Today, Thursday, the exchange rate rose only slightly in view of the latest foreign currency purchases by the central bank.

Basically, goods and services produced in Russia will become cheaper. Imports, on the other hand, will become more expensive. In general, Russia's purchasing power will fall. The weak exchange rate is also likely to fuel inflation in Russia.

Officially, the central bank is forecasting inflation of a maximum of 8.5 percent this year. However, experts believe that it is actually much higher - and this figure will rise again due to the weak rouble. Many consumers are also complaining about significantly higher price increases for food and everyday goods.

According to the business newspaper "Kommersant", producers of electronic household appliances have already informed stores of a ten percent price increase. But the problem affects all sectors that rely on technology from abroad.

So the Ministry of Defense is also likely to pay extra if it buys electronic components from abroad. Other products that will become more expensive are computers, cars and machinery. Other goods that Russia imports are pharmaceutical products, fruit and rubber.

Due to the slide of the rouble, the central bank in Russia is considering raising interest rates again. "There is practically no doubt that the board of the central bank will discuss the issue of a further increase in the key interest rate at the meeting in December," says central bank advisor Kirill Tremassov.

At 21 percent, the interest rate is already at its highest level since 2003, and the new rate hike is intended to curb inflation. The deputy head of the major state bank VTB, Dmitry Pjanov, expects the key interest rate to rise to 23 percent.

The high interest rates are painful for all citizens who need a loan to build a house, for example - with consequences for the construction industry. However, they are a particular problem for companies in Russia that need money from the bank for expansion or survival.

The defense industry, on the other hand, which is prospering thanks to government orders, is likely to continue to grow.

Some oligarchs are not happy about the central bank's interest rate policy: "It's as if the medicine is more harmful than the disease," Politico quotes billionaire Alexei Mordashov, CEO of metals giant Severstal.

Ukraine tickerUkrainians claim to have destroyed Russian radar worth millions in Crimea +++ Germany stations air defense in Poland again

"We need a serious discussion on the subject. This situation has probably never existed in modern world history. The central bank's rate is two and a half times higher than inflation, and it is still not going down," says Mordashov.

Even President Vladimir Putin felt compelled to comment on the development of the rouble and inflation: There is no reason to panic, the situation is under control, he assured at a press conference in the Kazakh capital Astana.

Expert on possible negotiations"Peace would come in handy for Putin"

At the same time, the Kremlin is taking advantage of the situation - and luring men into the army by offering them cheap home loans or debt relief if they join the armed forces.

With agency material.