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] | 2003-05-25T12:10:27+00:00 | en | /static/apple-touch/wikipedia.png | https://en.wikipedia.org/wiki/Russian_ruble | Currency of Russia
This article is about the currency of the modern Russian Federation. For the currencies of the Russian Empire and the Soviet Union, see Ruble.
RubleРоссийский рубль (Russian)[a]
руб, Rub
ISO 4217CodeRUB (numeric: 643)Subunit 0.01UnitUnitrublePluralThe language(s) of this currency belong(s) to the Slavic languages. There is more than one way to construct plural forms.Symbol₽DenominationsSubunit 1⁄100kopeyka (копейка)[b]Symbol kopeyka (копейка)[b]коп. or к (Cyrillic)
kop or k (Latin)Banknotes Freq. used5 ₽, 10 ₽, 50 ₽, 100 ₽, 200 ₽, 500 ₽, 1,000 ₽, 2,000 ₽, 5,000 ₽Coins Freq. used1 ₽, 2 ₽, 5 ₽, 10 ₽ Rarely used1 kop, 5 kop, 10 kop, 50 kop, 25 ₽DemographicsDate of introduction14 July 1992:
RUR (1 SUR = 1 RUR)
1 January 1998:
RUB (1,000 RUR = 1 RUB)ReplacedSoviet ruble (SUR)Official user(s)RussiaUnofficial user(s)Abkhazia, South OssetiaIssuanceCentral bankBank of Russia Websitewww .cbr .ruPrinterGoznak Websitewww .goznak .ruMintMoscow Mint and Saint Petersburg MintValuationInflation7.4% (December 2023) SourceBank of Russia MethodCPI
The ruble or rouble[c] (Russian: рубль, romanized: rublʹ; symbol: ₽; abbreviation: руб or р. in Cyrillic, Rub in Latin;[1] ISO code: RUB) is the currency of the Russian Federation. The ruble is subdivided into 100 kopecks (sometimes written as copeck or kopek; Russian: копе́йка, romanized: kopeyka, pl. копе́йки, kopeyki). It is used in Russia as well as in the parts of Ukraine under Russian military occupation and in Russian-occupied parts of Georgia.
The ruble was the currency of the Russian Empire and of the Soviet Union (as the Soviet ruble). In 1992, the currency imagery underwent a redesign as a result of the fall of the Soviet Union. The first Russian ruble (code: RUR) replaced the Soviet ruble (code: SUR) in September 1993 at par.
On 1 January 1998, preceding the Russian financial crisis, the ruble was redenominated with the new code "RUB" and was exchanged at the rate of 1 RUB = 1,000 RUR.
History
[edit]
Main article: Ruble
The ruble has been used in the Russian territories since the 14th century,[2] and is the second-oldest currency still in circulation, behind sterling.[3] Initially an uncoined unit of account, the ruble became a circulating coin in 1704 just before the establishment of the Russian Empire. It was also the first currency in Europe to be decimalised in 1704, when it was divided into 100 kopecks. The ruble has seen several incarnations and redenominations during its history, the latest of which is the introduction in 1998 of the current Russian ruble (code: RUB) at the rate of 1 RUB = 1,000 RUR.
RUR (1992–1998)
[edit]
Following the dissolution of the Soviet Union in 1991, the Soviet ruble remained the currency of the Russian Federation until 1992. A new set of coins was issued in 1992 and a new set of banknotes was issued in the name of Bank of Russia in 1993. The currency replaced the Soviet ruble at par and was assigned the ISO 4217 code RUR and number 810.
The ruble's exchange rate versus the U.S. dollar depreciated significantly from US$1 = 125 RUR in July 1992 to approximately US$1 = 6,000 RUR when the currency was redenominated in 1998.
RUR coins
[edit]
After the fall of the Soviet Union, the Russian Federation introduced new coins in 1992 in denominations of 1, 5, 10, 20, 50, and 100 rubles. The coins depict the double-headed eagle without a crown, sceptre and globus cruciger above the legend "Банк России" ("Bank of Russia"). It is exactly the same eagle that the artist Ivan Bilibin painted after the February Revolution as the coat of arms for the Russian Republic.[4] The 1 and 5-ruble coins were minted in brass-clad steel, the 10 and 20-ruble coins in cupro-nickel, and the 50 and 100-ruble coins were bimetallic (aluminium-bronze and cupro-nickel-zinc). In 1993, aluminium-bronze 50-ruble coins and cupro-nickel-zinc 100-ruble coins were issued, and the material of 10 and 20-ruble coins was changed to nickel-plated steel. In 1995 the material of 50-ruble coins was changed to brass-plated steel, but the coins were minted with the old date 1993. As high inflation persisted, the lowest denominations disappeared from circulation and the other denominations became rarely used.
During this period, the commemorative one-ruble coins were regularly issued continuing the specifications of prior commemorative Soviet rubles (31 mm diameter, 12.8 grams cupronickel). It is nearly identical to those of the 5-Swiss franc coin (31.45 mm, 13.2 g cupronickel), worth approx. €4.39 or US$5.09 as of August 2018. For this reason, there have been several instances of (now worthless) Soviet and Russian ruble coins being used on a large scale to defraud automated vending machines in Switzerland.[5]
RUR banknotes
[edit]
In 1961, new State Treasury notes were introduced for 1, 3 and 5 rubles, along with new State Bank notes worth 10, 25, 50, and 100 rubles. In 1991, the State Bank took over production of 1, 3 and 5-ruble notes and also introduced 200, 500 and 1,000-ruble notes, although the 25-ruble note was no longer issued. In 1992, a final issue of notes was made bearing the name of the USSR before the Russian Federation introduced 5,000 and 10,000-ruble notes. These were followed by 50,000-ruble notes in 1993, 100,000 rubles in 1995 and, finally, 500,000 rubles in 1997 (dated 1995).
Since the dissolution of the Soviet Union in 1991, Russian ruble banknotes and coins have been notable for their lack of portraits, which traditionally were included under both the Tsarist and Communist regimes. With the issue of the 500-ruble note depicting a statue of Peter I and then the 1,000-ruble note depicting a statue of Yaroslav, the lack of recognizable faces on the currency has been partially alleviated.
SUR and RUR series banknotes Series Value Obverse Reverse Issuer Languages 1961 1, 3, 5, 10, 25, 50, 100 rubles Vladimir Lenin or views of the Moscow Kremlin Value, and views of the Moscow Kremlin for 50 rubles or higher USSR multiple 1991 1, 3, 5, 10, 50, 100, 200, 500, 1,000 rubles Russian 1992 50, 200, 500, 1,000, 5,000, 10,000 rubles
USSR for 1,000 rubles and lower
Bank of Russia for 5,000- and 10,000 rubles
Russian 1993 100, 200, 500, 1,000, 5,000, 10,000, 50,000 rubles Moscow Kremlin with the tri-color Russian flag Bank of Russia 1995 1,000, 5,000, 10,000, 50,000, 100,000, 500,000 rubles Same design as today's banknotes, where 1 RUB = 1,000 RUR. The 1,000 ruble note did not continue as a 1 new ruble note.
RUB (1998–present)
[edit]
In 1998, the Russian ruble was redenominated with the new ISO 4217 code "RUB" and number 643 and was exchanged at the rate of 1 RUB = 1,000 RUR. All Soviet coins issued between 1961 and 1991, as well as 1-, 2- and 3-kopeck coins issued before 1961, also qualified for exchange into new rubles.[6]
The redenomination was an administrative step that reduced the unwieldiness of the old ruble[7] but occurred on the brink of the 1998 Russian financial crisis.[8] The ruble lost 70% of its value against the US dollar in the six months following this financial crisis, from US$1 = 6 ₽ to approximately 20 ₽.[9]
After stabilizing at around US$1 = 30 ₽ from 2001 to 2013, it depreciated to the range of US$1 = 60-80 ₽ from 2014 to 2021 as a result of the Annexation of Crimea by the Russian Federation in 2014 and the 2010s oil glut. After the 2022 Russian invasion of Ukraine, it declined further to US$1 = 110 ₽ due to sanctions.[10]
The ruble was subject to fluctuation when, in April 2022, the ruble went above its pre-war level after falling as low as 150 ₽ per dollar in early March,[11] with the longer-term trend showing a steady decline from mid-2022 to mid-2023, falling from 60 ₽ to 90 ₽ per dollar.[12]
On 15 July 2024 the Central Bank of the Russian Federation closed the statistics of the over-the-counter currency market,[13] and three days later the sale of ruble-note artwork on toilet paper was banned by a judge from Moscow.[14]
Symbol
[edit]
Main article: Ruble sign
Not to be confused with the Armenian letter ք.
A currency symbol was used for the ruble between the 16th century and the 18th century. The symbol consisted of the Russian letters "Р" (rotated 90° anti-clockwise) and "У" (written on top of it). The symbol was placed over the amount number it belonged to.[15] This symbol, however, fell into disuse by the mid-19th century.[16]
No official symbol was used during the final years of the Empire, nor was one introduced in the Soviet Union. The abbreviations Rbl (plural: Rbls) in Latin[17][18] and руб. (Cyrillic) and the simple characters R (Latin)[19][20][21] and р (Cyrillic) were used. These are still used today, though are unofficial.[22]
In July 2007, the Central Bank of Russia announced that it would decide on a symbol for the ruble and would test 13 symbols. This included the symbol РР (the initials of Российский Рубль "Russian ruble"), which received preliminary approval from the Central Bank.[23] However, one more symbol, a Р with a horizontal stroke below the top similar to the Philippine peso sign, was proposed unofficially.[23] Proponents of the new sign claimed that it is simple, recognizable and similar to other currency signs.[24][25][26] This symbol is also similar to the Armenian letter ք or the Latin letter Ꝑ.
On 11 December 2013, the official symbol for the ruble became , a Cyrillic letter Er with a single added horizontal stroke,[27][better source needed] though the abbreviation "руб." is in wide use.
On 4 February 2014, the Unicode Technical Committee during its 138th meeting in San Jose accepted U+20BD ₽ RUBLE SIGN symbol for Unicode version 7.0;[28] the symbol was then included into Unicode 7.0 released on 16 June 2014.[29] In August 2014, Microsoft issued updates for all of its mainstream versions of Microsoft Windows that enabled support for the new ruble sign.[30]
The ruble sign can be entered on a Russian computer keyboard as AltGr+8 on Windows and Linux, or AltGr+Р (Qwerty H position) on macOS.
Coins
[edit]
In 1998, the following coins were introduced in connection with the ruble revaluation and are currently in circulation:
Currently circulating coins[31] Image Value Technical parameters Description Years of minting Reverse Obverse Diameter Mass Composition Edge Obverse Reverse 1 kop 15.5 mm 1.5 g[32] Cupronickel-steel Plain Saint George Value
1997–2009
2014, 2017
5 kop 18.5 mm 2.6 g[32] 10 kop 17.5 mm 1.95 g[32] Brass Reeded Saint George Value 1997–2006 1.85 g Brass-plated steel Plain 2006–2015 50 kop 19.5 mm 2.90 g[32] Brass Reeded 1997–1999
2002–2006 2.75 g Brass-plated steel Plain 2006–2015 1 ₽ 20.5 mm 3.25 g Cupronickel Reeded Emblem of the Bank of Russia Value
1997–1999
2005–2009
3.00 g Nickel-plated steel 2009–2015 Coat of arms of Russia 2016–present 2 ₽ 23 mm 5.10 g Cupronickel Segmented (Plain and Reeded edges) Emblem of the Bank of Russia
1997–1999
2006–2009
5.00 g Nickel-plated steel 2009–2015 Coat of arms of Russia 2016–present 5 ₽ 25 mm 6.45 g Cupronickel-clad copper Emblem of the Bank of Russia
1997–1998
2008–2009
6.00 g Nickel-plated steel 2009–2015 Coat of arms of Russia 2016–present 10 ₽ 22 mm 5.63 g Brass-plated steel Segmented (plain and reeded edges) Emblem of the Bank of Russia Value 2009–2013, 2015 Coat of arms of Russia 2016–present
Kopeck coins are rarely used due to their low value and in some cases may not be accepted by stores or individuals.
These coins were issued starting in 1998, although some of them bear the year 1997. Kopeck denominations all depict St George and the Dragon, and all ruble denominations (with the exception of commemorative pieces) depict the double headed eagle. Mint marks are denoted by "СП" or "M" on kopecks and the logo of either the Saint Petersburg or Moscow mint on rubles. Since 2000, many bimetallic 10 ₽ circulating commemorative coins have been issued. These coins have a unique holographic security feature inside the "0" of the denomination 10.[citation needed]
In 2008, the Bank of Russia proposed withdrawing 1 and 5 kopeck coins from circulation and subsequently rounding all prices to multiples of 10 kopeks, although the proposal has not been realized yet (though characteristic "x.99" prices are treated as rounded in exchange).[citation needed] The Bank of Russia stopped minting one-kopeck and five-kopeck coins in 2012, and kopecks completely in 2018.[33]
The material of 1 ₽, 2 ₽ and 5 ₽ coins was switched from copper-nickel-zinc and copper-nickel clad to nickel-plated steel in the second quarter of 2009. 10 and 50 kopecks were also changed from brass to brass-plated steel.[citation needed]
In October 2009, a new 10 ₽ coin made of brass-plated steel was issued, featuring optical security features.[34] The 10 ₽ banknote would have been withdrawn in 2012, but a shortage of 10 ₽ coins prompted the Central Bank to delay this and put new ones in circulation.[35] Bimetallic commemorative 10-ruble coins will continue to be issued.[citation needed]
A series of circulating Olympic commemorative 25 ₽ coins started in 2011. The new coins are struck in cupronickel.[36] A number of commemorative smaller denominations of these coins exist in circulation as well, depicting national historic events and anniversaries.
The Bank of Russia issues other commemorative non-circulating coins ranging from 1 ₽ to 50,000 ₽.[37]
Banknotes
[edit]
On 1 January 1998, a new series of banknotes dated 1997 was released in denominations of 5 ₽, 10 ₽, 50 ₽, 100 ₽ and 500 ₽. The 1,000 ₽ banknote was first issued on 1 January 2001 and the 5,000 ₽ banknote was first issued on 31 July 2006. Modifications to the series were made in 2001, 2004, and 2010.
In April 2016, the Central Bank of Russia announced that it will introduce two new banknotes – 200 ₽ and 2,000 ₽ — in 2017.[38] In September 2016, a vote was held to decide which symbols and cities will be displayed on the new notes.[39] In February 2017, the Central Bank of Russia announced the new symbols. The 200 ₽ banknote will feature symbols of Crimea: the Monument to the Sunken Ships, a view of Sevastopol, and a view of Chersonesus. The 2,000 ₽ banknote will bear images of the Russian Far East: the bridge to Russky Island and the Vostochny Cosmodrome in the Amur Oblast.[40]
In 2018, the Central Bank issued a 100 ₽ "commemorative" banknote designed to recognize Russia's role as the host of the 2018 World Cup soccer tournament. The banknote is printed on a polymer substrate, and has several transparent portions as well as a hologram. Despite the note being intended for legal tender transactions, the Central Bank has simultaneously refused to allow the country's automated teller machines (ATMs) to recognize or accept it.[41]
In March 2021, the Central Bank announced plans to gradually update the designs of the 10 ₽, 50 ₽, 100 ₽, 1,000 ₽ and 5,000 ₽ banknotes and make them more secure; this is expected to be completed in 2025.[42]
The first new design, for the 100 ₽ note, was unveiled on 30 June 2022.[43] The design of the new note includes symbols of Moscow on the obverse - Red Square, Zaryadye Park, Moscow State University on Sparrow Hills, and Ostankino Tower - and the Rzhev Memorial to the Soviet Soldier on the reverse.[44]
In late 2022, the Central Bank resumed the printing of 5-ruble and 10-ruble notes for circulation; freshly printed notes began appearing in 2023.[45]
1997 series[46] Image Value Dimensions Description Dates Obverse Reverse Town Obverse Reverse Watermark Printing* Issue Withdrawal Lapse 5 ₽ 137 × 61 mm Veliky Novgorod The Millennium of Russia monument on background of Saint Sophia Cathedral Fortress wall of the Novgorod Kremlin "5", Saint Sophia Cathedral 1997
2022
1 January 1998 Current, but not issued from 2001 until 2021.
Re-issued in 2022. Rarely seen in circulation. Returned to circulation in 2023.[45]
10 ₽ 150 × 65 mm Krasnoyarsk Kommunalny Bridge across the Yenisei River, Paraskeva Pyatnitsa Chapel Krasnoyarsk hydroelectric plant "10", Paraskeva Pyatnitsa Chapel
1997
2001
2004
2022
Current, but not issued from 2010 to 2021.
Re-issued in 2022. Still in use, but rarely seen in circulation. Returned to circulation in 2023.[45]
50 ₽ Saint Petersburg A Rostral Column sculpture on background of Peter and Paul Fortress Old Saint Petersburg Stock Exchange and Rostral Columns "50", Peter and Paul Cathedral Current 100 ₽ Moscow Quadriga statue on the portico of the Bolshoi Theatre The Bolshoi Theatre "100", The Bolshoi Theatre 500 ₽ Arkhangelsk Monument to Czar Peter the Great, sailing ship and sea terminal[47] Solovetsky Monastery "500", portrait of Peter the Great
1997
2001
2004
2010
1,000 ₽ 157 × 69 mm Yaroslavl Monument to Yaroslav I the Wise and the Lady of Kazan Chapel John the Baptist Church "1,000", portrait of Yaroslav the Wise
2001
2004
2010
1 January 2001 5,000 ₽ Khabarovsk Monument to Nikolay Muravyov-Amursky Khabarovsk Bridge over the Amur "5,000", portrait of Muravyov-Amursky
2006
2010
31 July 2006 These images are to scale at 0.7 pixel per millimetre. For table standards, see the banknote specification table.
Each new banknote series has enhanced security features, but no major design changes. Banknotes printed after 1997 bear the fine print "модификация 2001г." (or later date) meaning "modification of year 2001" on the left watermark area.
2017–2025 series[46] Image Value Dimensions Description Date of Obverse Reverse Federal District Obverse Reverse Watermark printing issue withdrawal lapse 100 ₽ 150 × 65 mm Central Federal District Moscow: Spasskaya Tower, Zaryadye Park, Moscow State University, Ostankino Tower Memorial to the Soviet Soldier, Rzhev, Tver Oblast; Kulikovo Field, Tula Oblast "100", Spasskaya Tower 2022 30 June 2022 Current 200 ₽ 150 × 65 mm Southern Federal District Monument to the Sunken Ships (by sculptor Amandus Adamson), Sevastopol View of Chersonesus "200", Monument to the Sunken Ships 2017 12 October 2017 1,000 ₽ 157 × 69 mm Volga Federal District Nizhny Novgorod: Nikolskaya Tower of the Nizhny Novgorod Kremlin, Nizhny Novgorod Fair, Spit of Nizhny Novgorod, Nizhny Novgorod Stadium Museum of the History of Statehood of the Tatar People and the Republic of Tatarstan in Kazan, Söyembikä Tower on the Kazan Kremlin, Museum of Archeology and Ethnography in Ufa "1000", Nikolskaya Tower of the Nizhny Novgorod Kremlin 2023 16 October 2023 2,000 ₽ 157 × 69 mm Far Eastern Federal District Vladivostok: Russky Bridge, Far Eastern Federal University Vostochny Cosmodrome, Tsiolkovsky, Amur Oblast "2000", Russky Bridge 2017 12 October 2017 5,000 ₽ 157 × 69 mm Ural Federal District Yekaterinburg: Stele "Europe - Asia", Iset Tower in Yekaterinburg-City, Vysotsky, Yekaterinburg Circus, House of Communications (main post office building), Palace of Sporting Games, Sevastyanov's House Monument "Tale of the Urals" in Chelyabinsk, metallurgical plant, stele "66 parallel" (Arctic Circle) in Salekhard, oil and gas industry facilities "5000", House of Communications (main post office building), Sevastyanov's House 2023 16 October 2023
For the rest of the 2017–2025 series, the following designs are planned:[48]
10 ₽ (2025): Novosibirsk on the obverse, Siberian Federal District on the reverse
50 ₽ (2025): Saint Petersburg on the obverse, Northwestern Federal District on the reverse
500 ₽ (2024): Pyatigorsk on the obverse, North Caucasian Federal District on the reverse.
Printing
[edit]
All Russian ruble banknotes are currently printed at the state-owned factory Goznak in Moscow, which was founded on 6 June 1919 and operated ever since. Coins are minted in the Moscow Mint and at the Saint Petersburg Mint, which has been operating since 1724.
100 ₽ note controversy
[edit]
On 8 July 2014, State Duma deputy and vice-chairman of the Duma Regional Political Committee Roman Khudyakov alleged that the image of the Greek god Apollo driving a Quadriga on the portico of the Bolshoi Theatre in Moscow on the 100 ₽ banknote constitutes pornography that should only be available to persons over the age of 18. Since it is impractical to limit the access of minors to banknotes, he requested in his letter to the Governor of the Bank of Russia Elvira Nabiullina to immediately change the design of the banknote.[49]
Khudyakov, a member of parliament for the LDPR party stated, "You can clearly see that Apollo is naked, you can see his genitalia. I submitted a parliamentary request and forwarded it directly to the head of the central bank asking for the banknote to be brought into line with the law protecting children and to remove this Apollo."[50][51] Khudyakov's efforts did not lead to any changes being made to the design.
Crimea controversy
[edit]
On 13 October 2017, the National Bank of Ukraine issued a decree forbidding the country's banks, other financial institutions and Ukraine's state postal service to circulate Russian banknotes which use images of Crimea, a territory that is regarded as Russian-occupied by Ukraine and whose annexation by Russia is not recognised by most UN member states.[52] The NBU stated that the ban applies to all financial operations, including cash transactions, currency exchange activities and interbank trade.[53] Crimea is featured on three banknotes that are currently in circulation – the 100 ₽ commemorative notes issued in 2015 and 2018, as well as the 200 ₽ note issued in 2017.
1,000 ₽ note controversy
[edit]
On 16 October 2023, the day of unveilling of the new design of the 1,000-ruble note, the design of the note was criticised by the Russian Orthodox Church for displaying the Islamic crescent on one of the buildings on the reverse of the note at the same time as excluding the Orthodox cross from a different building (a former church that is now a museum).[54] The Bank of Russia claimed that the image was not selected to provoke or disregard any faith, but announced on the following day that the design would be revised and the notes would not be printed.[citation needed]
Effect of international sanctions
[edit]
Kommersant reported that the new 100 ₽ note introduced in 2022 will not work with an estimated 60% of cash registers and bank machines because they are imported and therefore must be updated by foreign companies, and this work may not be completed due to sanctions.[55][56] However, Russian banks have been transferring their ATM networks to domestic software which does not require foreign specialists since at least 2018, with the biggest Russian bank, Sberbank, completing 80% of the transfer by June 2022.[57] Russian banks will start purchasing domestic ATMs with Elbrus processors in 2023, the mandatory share of Russian products in the purchase of ATMs was to be at least 18% for banks with state partnership, since 2022 it has grown to 20%.[58]
Commemorative banknotes
[edit]
Commemorative banknote series[59] Image Value Dimensions Description Dates Obverse Reverse Obverse Reverse Watermark Printing* Issue Withdrawal Lapse 100 ₽ 150 × 65 mm A snowboarder and some of the Olympic venues of the Sochi coastal cluster. Fisht Olympic Stadium in Sochi, firebird 2014 Winter Olympics logo 2014 30 October 2013 Current 100 ₽ 150 × 65 mm Monument to the Sunken Ships in Sevastopol Bay, outlines of Monument to the heroes of the Second Siege of Sevastopol and St. Vladimir Cathedral, fragment of a painting by Ivan Aivazovsky Swallow's Nest castle, Yevpatoria RT-70 radio telescope, outline of Big Khan Mosque in Bakhchisaray and a green stripe containing a QR code linking to the Bank of Russia webpage containing historical information relating to the commemorative banknote Portrait of Empress Catherine the Great 2015 23 December 2015 100 ₽ 150 × 65 mm A boy with a ball under his arm looking up as Lev Yashin saves a ball. A stylized image of the globe in the form of a football with a green image of Russia's territory (including Crimea) outlined on it, as well as the name of the 2018 FIFA World Cup host cities The number 2018 2018 22 May 2018
On 30 October 2013, a special banknote in honour of the 2014 Winter Olympics held in Sochi was issued. The banknote is printed on high-quality white cotton paper. A transparent polymer security stripe is embedded into the paper to make a transparent window incorporating an optically variable element in the form of a snowflake. The highlight watermark is visible in the upper part of the banknote. Ornamental designs run vertically along the banknote. The front of the note features a snowboarder and some of the Olympic venues of the Sochi coastal cluster. The back of the note features the Fisht Olympic Stadium in Sochi. The predominant colour of the note is blue.
On 23 December 2015, another commemorative 100 ₽ banknote was issued to celebrate the "reunification of Crimea and Russia". The banknote is printed on light-yellow-coloured cotton paper. One side of the note is devoted to Sevastopol, the other one — to Crimea. А wide security thread is embedded into the paper. It comes out on the surface on the Sevastopol side of the banknote in the figure-shaped window. A multitone combined watermark is located on the unprinted area in the upper part of the banknote. Ornamental designs run vertically along the banknote. The Sevastopol side of the note features the Monument to Sunken Ships in Sevastopol Bay and a fragment of the painting "Russian Squadron on the Roads of Sevastopol" by Ivan Aivazovsky. The Crimea side of the note features the Swallow's Nest, a decorative castle and local landmark. In the lower part of the Sevastopol side of the banknote in the green stripe there is a QR-code containing a link to the Bank of Russia's webpage, which lists historical information related to the banknote. The predominant colour of the note is olive green.
On 22 May 2018, a special banknote to celebrate the 2018 FIFA World Cup was issued.[60] The banknote is printed on polymer. The top part of the note bears a transparent window that contains a holographic element. The design of the note is vertically oriented. The main images of the obverse are a boy with a ball under his arm and a goalkeeper diving for a ball. The main image of the reverse is a stylized image of the globe in the form of a football with green image of the Russian territory outlined on it. On the reverse there is the number 2018 that marks both the issue of the banknote and the World Cup, as well as the name of the host cities in the Russian language. The bottom right corner of the obverse bears a QR-code, which contains a link to the page of the Bank of Russia website with the description of the note's security features. Predominant colours of the note are blue and green.
Economics
[edit]
The use of other currencies for transactions between Russian residents is punishable, with a few exceptions, with a fine of 75% to 100% of the value of the transaction.[61]
International trade
[edit]
On 23 November 2010, at a meeting of Russian Prime Minister Vladimir Putin and Chinese Premier Wen Jiabao, it was announced that Russia and China had decided to use their own national currencies for bilateral trade, instead of the US dollar. The move is aimed to further improve relations between Beijing and Moscow and to protect their domestic economies during the Great Recession. The trading of the Chinese yuan against the ruble has started in the Chinese interbank market, while the yuan's trading against the ruble was set to start on the Russian foreign exchange market in December 2010.[62][better source needed]
In January 2014, President Putin said there should be a sound balance on the ruble exchange rate; that the Central Bank only regulated the national currency exchange rate when it went beyond the upper or lower limits of the floating exchange rate; and that the freer the Russian national currency is, the better it is, adding that this would make the economy react more effectively and timely to processes taking place in it.[63]
Exchange rates
[edit]
Current RUB exchange rates From Google Finance: AUD CAD CHF CNY EUR GBP HKD JPY USD From Yahoo! Finance: AUD CAD CHF CNY EUR GBP HKD JPY USD From XE.com: AUD CAD CHF CNY EUR GBP HKD JPY USD From OANDA: AUD CAD CHF CNY EUR GBP HKD JPY USD
The first Russian ruble (RUR) introduced in January 1992 depreciated significantly versus the US dollar from US$1 = 125 RUR to around US$1 = 6,000 RUR (or 6 RUB) when it was redenominated in January 1998. The new ruble then depreciated rapidly in its first year to US$1 = 20 RUB before stabilizing at around US$1 = 30 RUB from 2001 to 2013.
The financial crisis in Russia in 2014–2016 was the result of the collapse of the Russian ruble beginning in the second half of 2014.[64][65][66][67][68][69] A decline in confidence in the Russian economy caused investors to sell off their Russian assets, which led to a decline in the value of the Russian ruble and sparked fears of a Russian financial crisis. The lack of confidence in the Russian economy stemmed from at least two major sources. The first is the fall in the price of oil in 2014. Crude oil, a major export of Russia, declined in price by nearly 50% between its yearly high in June 2014 and 16 December 2014. The second was the result of international economic sanctions imposed on Russia following Russia's annexation of Crimea and the Russian military intervention in Ukraine.[64][70]
The crisis affected the Russian economy, both consumers and companies, and regional financial markets, as well as Putin's ambitions regarding the Eurasian Economic Union. The Russian stock market in particular experienced large declines, with a 30% drop in the RTS Index from the beginning of December through 16 December 2014. From July 2014 to February 2015 the ruble fell dramatically against the U.S. dollar. A 6.5 percentage point interest rate rise to 17 percent[71] failed to prevent the currency hitting record lows in a "perfect storm" of low oil prices, looming recession and international sanctions over the Russo-Ukrainian War.[72]
Russia faced steep economic sanctions due to the invasion of Ukraine in early 2022. In response to the military campaign, several countries imposed strict economic sanctions on the Russian economy.[d] This led to a 32 percent drop in the value of the ruble, which traded at an exchange rate of 120 rubles per dollar in March 2022.[10] On 23 March 2022, President Putin announced that Russia would only accept payments for Russian gas exports from “unfriendly countries” in rubles.[73] This, along with several other actions to control capital flow, coinciding with soaring commodity prices led to the ruble rallying to a record high in May 2022 that economists feel is unlikely to last.[74] However, the ruble continued to rally in June 2022, hitting its highest point (51 rubles to the dollar) for the past seven years at the end of the month.[75]
RUB per US$1998–2023 Year Lowest ↓ Highest ↑ Average Date Rate Date Rate Rate 1998 1 January 5.9600 29 December 20.9900 9.7945 1999 1 January 20.6500 29 December 27.0000 24.6489 2000 6 January 26.9000 23 February 28.8700 28.1287 2001 4 January 28.1600 18 December 30.3000 29.1753 2002 1 January 30.1372 7 December 31.8600 31.3608 2003 20 December 29.2450 9 January 31.8846 30.6719 2004 30 December 27.7487 1 January 29.4545 28.8080 2005 18 March 27.4611 6 December 28.9978 28.1910 2006 6 December 26.1840 12 January 28.4834 27.1355 2007 24 November 24.2649 13 January 26.5770 25.5808 2008 16 July 23.1255 31 December 29.3804 24.8529 2009 13 November 28.6701 19 February 36.4267 31.7403 2010 16 April 28.9310 8 June 31.7798 30.3679 2011 6 May 27.2625 5 October 32.6799 29.3823 2012 28 March 28.9468 5 June 34.0395 31.0661 2013 5 February 29.9251 5 September 33.4656 31.9063 2014 1 January 32.6587 18 December 67.7851 38.6025 2015 17 April 49.6749 31 December 72.8827 61.3400 2016 30 December 60.2730 22 January 83.5913 66.8336 2017 26 April 55.8453 4 August 60.7503 58.2982 2018 28 February 55.6717 12 September 69.9744 62.9502 2019 26 December 61.7164 15 January 67.1920 64.6184 2020 10 January 61.0548 18 March 80.8692 72.4388 2021 27 October 69.5526 8 April 77.7730 73.6628 2022 30 June 51.1580 11 March 120.3785 68.4869 2023 15 January 66.0026 8 October 101.0001 85.5086 Source: USD exchange rates in RUB, Bank of Russia[76]
Most traded currencies by value
Currency distribution of global foreign exchange market turnover[77] Rank Currency ISO 4217
code Symbol or
abbreviation Proportion of daily volume Change
(2019–2022) April 2019 April 2022 1 U.S. dollar USD US$ 88.3% 88.5% 0.2pp 2 Euro EUR € 32.3% 30.5% 1.8pp 3 Japanese yen JPY ¥ / 円 16.8% 16.7% 0.1pp 4 Sterling GBP £ 12.8% 12.9% 0.1pp 5 Renminbi CNY ¥ / 元 4.3% 7.0% 2.7pp 6 Australian dollar AUD A$ 6.8% 6.4% 0.4pp 7 Canadian dollar CAD C$ 5.0% 6.2% 1.2pp 8 Swiss franc CHF CHF 4.9% 5.2% 0.3pp 9 Hong Kong dollar HKD HK$ 3.5% 2.6% 0.9pp 10 Singapore dollar SGD S$ 1.8% 2.4% 0.6pp 11 Swedish krona SEK kr 2.0% 2.2% 0.2pp 12 South Korean won KRW ₩ / 원 2.0% 1.9% 0.1pp 13 Norwegian krone NOK kr 1.8% 1.7% 0.1pp 14 New Zealand dollar NZD NZ$ 2.1% 1.7% 0.4pp 15 Indian rupee INR ₹ 1.7% 1.6% 0.1pp 16 Mexican peso MXN MX$ 1.7% 1.5% 0.2pp 17 New Taiwan dollar TWD NT$ 0.9% 1.1% 0.2pp 18 South African rand ZAR R 1.1% 1.0% 0.1pp 19 Brazilian real BRL R$ 1.1% 0.9% 0.2pp 20 Danish krone DKK kr 0.6% 0.7% 0.1pp 21 Polish złoty PLN zł 0.6% 0.7% 0.1pp 22 Thai baht THB ฿ 0.5% 0.4% 0.1pp 23 Israeli new shekel ILS ₪ 0.3% 0.4% 0.1pp 24 Indonesian rupiah IDR Rp 0.4% 0.4% 25 Czech koruna CZK Kč 0.4% 0.4% 26 UAE dirham AED د.إ 0.2% 0.4% 0.2pp 27 Turkish lira TRY ₺ 1.1% 0.4% 0.7pp 28 Hungarian forint HUF Ft 0.4% 0.3% 0.1pp 29 Chilean peso CLP CLP$ 0.3% 0.3% 30 Saudi riyal SAR ﷼ 0.2% 0.2% 31 Philippine peso PHP ₱ 0.3% 0.2% 0.1pp 32 Malaysian ringgit MYR RM 0.2% 0.2% 33 Colombian peso COP COL$ 0.2% 0.2% 34 Russian ruble RUB ₽ 1.1% 0.2% 0.9pp 35 Romanian leu RON L 0.1% 0.1% 36 Peruvian sol PEN S/ 0.1% 0.1% 37 Bahraini dinar BHD .د.ب 0.0% 0.0% 38 Bulgarian lev BGN BGN 0.0% 0.0% 39 Argentine peso ARS ARG$ 0.1% 0.0% 0.1pp … Other 1.8% 2.3% 0.5pp Total[e] 200.0% 200.0%
See also
[edit]
Belarusian ruble
Transnistrian ruble
Ruble (disambiguation), various historic and modern rubles.
Notes
[edit]
References
[edit]
Citations
[edit]
Sources
[edit] | ||||||
9245 | dbpedia | 0 | 59 | https://www.themoscowtimes.com/2023/08/14/kremlin-unfazed-as-ruble-crashes-through-100-vs-dollar-a82145 | en | Kremlin Unfazed as Ruble Crashes Through 100 vs. Dollar | [
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] | 2023-08-14T00:00:00 | The Russian ruble’s slide past 100 against the dollar has exposed a multi-billion dollar dilemma at the heart of the Russian economy: how can the Kremlin carry on funding its war against Ukraine without triggering a surge in inflation and fresh fears of an economic crisis at home? | en | https://static.themoscowtimes.com/img/icons/favicon.ico | The Moscow Times | https://www.themoscowtimes.com/2023/08/14/kremlin-unfazed-as-ruble-crashes-through-100-vs-dollar-a82145 | The Russian ruble’s slide past 100 against the dollar has exposed a multi-billion dollar dilemma at the heart of the Russian economy: how can the Kremlin carry on funding its war against Ukraine without triggering a surge in inflation and fresh fears of an economic crisis at home?
The ruble dipped below the crucial level on Monday for the first time since March 2022, when the Russian economy appeared to be on the brink of collapse amid Moscow’s invasion of Ukraine and a cascade of Western sanctions.
Last year, sweeping capital controls, an emergency interest rate hike and a rapid surge in the production of guns, missiles, tanks and artillery shells to be used against Ukraine saved the ruble and helped Russia’s economy defy predictions of a double-digit hit to GDP.
But with the war having raged for 18 months and more Western sanctions now in place — such as an oil price cap and drastic cuts in European purchases of Russian gas — the ruble’s decline underscores the challenges Moscow will face in an attempt to repeat last year’s fire-fighting efforts.
The ruble has lost half its value since a peak in June 2022, a devaluation that has raised the specter of a familiar foe — inflation.
Prices are once again rising faster than the government’s official 4% target. Food prices, which usually fall in the summer months, are steadily increasing and the central bank’s forecast — penned before the latest currency slide — foresees inflation accelerating toward 6.5% by the end of this year.
“The collapse of the ruble has already triggered an inflationary spiral. It can only be stopped by bringing the rate back under 90,” said Yevgeny Suvorov, an economist at Moscow-based CentroCredit Bank.
For Russians who have grown accustomed to economic crises in the three decades since the fall of the Soviet Union, the ruble exchange rate has powerful symbolic importance as a marker of the economy’s overall health. Economists say the fall into triple-digit territory — a vital psychological threshold — could further push Russians to move their assets out of the country, or at least, into other currencies.
“It’s obvious that the ongoing weakening of the ruble will not only stoke inflation even more, but will undermine trust in the currency itself and the economy in general,” Yevgeny Kogan, an economics professor at Moscow’s Higher School of Economics (HSE), wrote in a post on his Telegram channel.
Foreign cash holdings are up 23% this year among Russians while outflows to foreign banks have jumped 41%, he noted.
Kogan said a sustained breakthrough of 100 rubles against the dollar could lead to serious price hikes by companies that use imported goods or equipment, and it might trigger financial panic among the population.
Across Russian society, a feeling that the government cares little about the falling ruble is spreading, with talk of how the Kremlin benefits from a falling currency cropping up across Russian social media.
A weaker currency means Russia’s energy exports, dictated by global dollar-based oil prices, will funnel more rubles into the government’s coffers.
The amount of rubles earned for every barrel of Russia’s Urals blend of crude oil has more than doubled this year — from 3,320 on Jan. 1 to 7,300, according to market data.
Overall, every 10-point slide in the value of the ruble against the dollar — from 90 to 100, for instance — brings in an extra 1 trillion rubles ($10 billion) for the Russian state, Renaissance Capital’s Sofya Donets calculates. The same fall adds 0.5-1 percentage point to inflation, Kogan estimates.
Those extra funds are sorely needed by Moscow, which has chalked up a 2.8-trillion ruble ($28 billion) budget deficit so far this year.
A weaker ruble means Russia can buy more arms, ammunition and pay higher salaries for soldiers, making devaluation an attractive short-term solution to the Kremlin’s budget woes and its top priority — funding the invasion of Ukraine. Battling inflation and dealing with the other domestic costs of a weak currency, can come later.
“It’s more important to get through the next few months, or until spring, and in the long run, if things turn out worse because of this, then it doesn't really matter. It matters, but what matters much more is the ability to be able to wage war and pay bills in the next 4-6 months,” Iikka Korhonen, head of the Bank of Finland Institute for Emerging Economies (BOFIT), said of the Kremlin’s logic.
With spending on the war the Kremlin’s overriding priority, analysts are poised for potentially drastic action from the Central Bank, whose main task since the invasion has been to mitigate the domestic economic impacts of Russia’s war.
Responding to the currency's slide, the Central Bank on Monday afternoon said its board of directors would hold an emergency meeting on Tuesday — its first extraordinary session since Feb. 28, 2022 — where it is set to raise interest rates from their current level of 8.5%.
The ruble temporarily strengthened above 100 on the news.
Last week, Russia's Central Bank suspended foreign currency purchases until at least the end of the year under its so-called “budget rule,” which would typically funnel excess profits from oil and gas sales into foreign currency holdings. But that measure had little effect in halting the ruble's descent. Yet more serious moves are not being ruled out.
“Monetary policy is by no means the only tool in the financial authorities’ arsenal,” said Alexander Bakhtin, an investment strategist at Moscow-based BCS brokerage.
“A return to mandatory regulations on the sale of foreign currency earnings and strengthening of currency controls is possible.”
But it remains far from clear that new capital controls would have the same effect in stopping the slide as it did 18 months ago. The shrinking of Russia’s current account surplus — down from $165 billion in the first seven months of 2022 to $25.2 this year — has significantly changed the ruble’s basic supply-and-demand dynamics.
The Central Bank has repeatedly indicated the strictest kinds of capital controls, like forced conversions of foreign currency earnings, should only be temporary measures and reserved for major financial crises. But with the Kremlin’s dead set on marshaling resources for its war, other options may be limited.
“Previously, the Central Bank was always very reluctant to take those kinds of actions,” said BOFIT’s Korhonen. “Now with the war, the cost-benefit analysis has changed, so those measures are always there. But the thing with capital controls is, the longer they are in place, the harder the costs will be.”
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9245 | dbpedia | 2 | 17 | https://rusmania.com/practicalities/money | en | Russian Money | [
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►Practicalities ►Russian Money
The rouble as unit of currency has been used in Russia since the 13th century. One theory of the origin of the word rouble is that it is derived from the Russian word for 'to chop' ('rubit') as originally a rouble was a slither chopped of a piece of silver. It is theorised that kopeck is the diminutive form of the Russian word for a 'spear' ('kopyo') as the first kopeck coins contained the image of a spear.
The official symbol for the Russian rouble was only adopted in December 2013 and depicts a 'P' (a Russian 'R') with a horizontal cross. Usually you will see prices written as "100 руб." or sometimes just "100 р". The official ISO code for the rouble is 'RUB'.
Exchange rates
1 US Dollar ~ 61 Russian Roubles
1 UK Pound ~ 80 Russian Roubles
1 Euro ~ 70 Russian Roubles
RUB 5 BANKNOTE
Even though the RUB 5 banknote is still legal tender, there are practically none left in circulation so you won't be finding one in your change. The surviving ones are all in collections or kept as souvenirs. The note is green in colour and features the city of Novgorod Veliky. On the front it depicts the Millennium of Russia Monument Bell and St Sophia's Cathedral and on the back it depicts the Novgorod Kremlin.
RUB 10 BANKNOTE
Since the introduction of the RUB 10 coin, the RUB 10 banknote is also becoming rarer but you will still probably see one on your trip. They are dark-green and brown in colour and feature the city of Krasnoyarsk. The front shows the bridge over the River Yenisey and St Paraskevi Pyatnitsa's Chapel. The back has an image of the Krasnoyarsk Hydroelectric Dam. A slang term for RUB 10 is a 'desyatka'.
RUB 50 BANKNOTE
The light-blue RUB 50 banknote features St Petersburg. On its front it has an image of the monument of the personification of the River Neva (note the statue has six toes!) and the Ss Peter and Paul's Fortress can be seen in the background. The back of the note depicts the strelka of Vasilievsky Island. In common slang RUB 50 is sometimes called a 'poltinnik'.
RUB 100 BANKNOTE
The RUB 100 banknote is beige in colour and features Moscow. On the front is a depiction of the statue of the man and chariot which stands on top of the Bolshoi Theatre. The back has an image of the whole of the Bolshoi Theatre. The term 'sotka' is slang for RUB 100.
RUB 200 BANKNOTE
The new RUB 200 note is green and features the Crimean city of Sevastopol; the Monument to the Sunken Ships on the front and Khersones on the back. The choice of Sevastopol is of course rather controversial for countries who do not recognise Crimea as part of the Russian Federation.
RUB 500 BANKNOTE
The pink and purple RUB 500 note has images of both Arkhangelsk and the Solovetsky Islands. The front has a picture of the Peter the Great Monument and the River Port in Arkhangelsk, while the back depicts the Solovetsky Spaso-Preobrazhensky Monastery in the Solovetsky Islands.
RUB 1000 BANKNOTE
The RUB 1000 banknote is turquoise and slightly longer than the other notes. It contains images of the city of Yaroslavl. The Yaroslav the Wise Monument and the Our Lady of Kazan Chapel are on the front of the note. The other side depicts the beautiful Beheading of St John the Baptist Church in Tolchkov. A slang term for RUB 1000 is a 'shtuka' which literally means a 'thing'.
RUB 2000 BANKNOTE
The RUB 2,000 note. It is dark blue in colour and its front is decorated with an image of Vladivostok's Russky Bridge, while Vostochny Cosmodrome in the Amur Region is on the back.
RUB 5000 BANKNOTE
The RUB 5000 banknote was introduced in 2006 and became one of the most valuable notes in the world worth approximately EUR 120 or USD 150. It too is slightly bigger than the smaller-value notes. The Siberian city of Khabarovsk is depicted on the note. The front has images of the Nikolai Muraviev-Amursky Monument and the back depicts the bridge over the River Amur.
KOPECKS
There are currently four coins worth less than a rouble. These are the 1 and 5 kopeck coins which are made out of steal and cupronickel and the 10 and 50 kopeck coins which are now made out of tompac-plated steel, although they were previously made out of brass before 2006.
1 and 5 kopeck coins are becoming rarer as shops are more frequently rounding amounts up or down. None of these coins can actually buy you anything, and it is not unusual to see them discarded at the checkout if they are given as change. Most people also have jars of these coins at home. On the front of the coin the number of kopecks is written in figures and the back depicts an image of St George slaying the dragon.
RUB 1-5 COINS
Also in circulation are coins worth RUB 1, RUB, 2 and RUB 5 which are now all made out of nickel-plated steel. The front of the coin states the value in figures and the back has an image of the Russian double-headed eagle. The coins increase in size according to the value: the RUB 1 coin is 20.5mm in diameter, the RUB 2 is 23mm and the RUB 5 is 25mm. In addition to the standard RUB 2 some special RUB 2 commemorative coins also exist, although most of these have since been taken out of circulation by collectors. Special coins include a series of coins dedicated to the 12 Hero Cities of the Soviet Union and coins featuring Yuri Gagarin.
RUB 10 COINS
In 2010 a new RUB 10 coin was introduced into circulation. The coin is made out of brass-plated steel and is 22mm in diameter. On the front it says 10 roubles in Russian and on the back is the Russian double-headed eagle. There is also a series of special commemorative RUB 10 coins, which depict coat of arms of cities of military glory.
In addition to the new style RUB 10 coins, there is also another RUB 10 coin which you might still see in circulation although most of these have since ended up in collections. The coins are 27mm in diameter and are made out of cupronickel with a brass ring around the edge. These coins are all commemorative and there are several themes, including federal subjects and ancient cities of Russia. | |||||
9245 | dbpedia | 1 | 42 | https://www.bloomberg.com/news/articles/2024-06-13/usd-rub-after-us-dollar-trade-sanctions-russians-look-to-yuan-cny | en | Russians See Little Fallout After US Sanctions Hit Dollar Exchange Trade | [
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] | null | [] | 2024-06-13T00:00:00 | The latest round of US sanctions effectively ended three decades of daily exchange trading in the dollar for Russia’s ruble that first began in the twilight of the Soviet Union. Russians mostly took the news in stride. | en | Bloomberg.com | https://www.bloomberg.com/news/articles/2024-06-13/usd-rub-after-us-dollar-trade-sanctions-russians-look-to-yuan-cny | The latest round of US sanctions effectively ended three decades of daily exchange trading in the dollar for Russia’s ruble that first began in the twilight of the Soviet Union. Russians mostly took the news in stride.
The Moscow Exchange from Thursday halted trading on several markets involving dollars and euros after the company, also known as Moex, was targeted along with its settlement depository unit under US restrictions aimed at further isolating Moscow from the international financial system over its war in Ukraine. The UK followed the US with sanctions on the exchange. | |||||
9245 | dbpedia | 0 | 75 | https://tradingeconomics.com/russia/currency | en | Historical Data | https://d3fy651gv2fhd3.cloudfront.net/favicon.ico | https://d3fy651gv2fhd3.cloudfront.net/favicon.ico | [
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9245 | dbpedia | 2 | 83 | https://www.intellinews.com/the-ruble-overtakes-the-yuan-as-russia-s-main-currency-for-settling-international-trade-deals-320261/ | en | The ruble overtakes the yuan as Russia's main currency for settling international trade deals | [
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] | 2024-04-09T07:02:22+00:00 | The ruble has overtaken the yuan to become the main currency used for settling international trade deals, the Central Bank of Russia (CBR) reported ... | en | //cfemdpublic.intellinews.com/assets/ico/favicon.png | https://www.intellinews.com/the-ruble-overtakes-the-yuan-as-russia-s-main-currency-for-settling-international-trade-deals-320261/ | The ruble has overtaken the yuan to become the main currency used for settling international trade deals, the Central Bank of Russia (CBR) reported on April 8.
The share of the ruble used to settle international trade deals has risen to over 40%, up from a third last year, while the share of the yuan has slipped slightly to around 30%.
The CBR also reported that in March the share of the yuan in the on-exchange and over-the-counter FX markets had reached new all-time highs of 53% and 39.6% respectively.
Following the SWIFT sanctions that were imposed only days after Russia’s invasion of Ukraine in February, Russia was cut off from using the dollar to settle trade deals and switched almost entirely to using the yuan for international transactions.
The change has been made easier by many of Russia’s trade partners from the so-called friendly countries being likewise unsettled by Washington’s decision to weaponise its currency and they have also been happy to settle more of their foreign trade transactions using national currencies.
The share of the ruble in Russia's international trade has significantly increased since the start of this year. Ruble transactions with the EU rose to 49% (due to sanctions exemptions), with South America it has increased to 35%, and with Africa, the growth more than doubled to 48%. Meanwhile, the shares of the dollar and euro in trade with Asia and Africa fell by more than half.
Despite sanctions, Russia has seen the ruble emerge as the predominant currency in its foreign trade payments, according to the latest figures from the CBR. According to February's data, the ruble accounted for 41.6% of payments for Russian exports and 38.1% for imports, surpassing its previous records.
The ruble's share in Russia's foreign trade transactions accounted for less than a third of all settlements in 2023. The data also highlighted a decline in the use of the Chinese yuan, which has been a proxy for dollar until now, with its share in Russian export payments dropping to 30.2%, and for import payments it has slipped to 32.3% in the first quarter of this year.
Russia has completely expunged the dollar and the euro from its gross international reserves, which are hovering at just under $600bn as of March. Of that money, half is frozen in accounts in Europe, but from the remainder half ($150bn) is in monetary gold and the rest in yuan, plus a smattering of other “friendly” currencies.
The dollar continues to dominate global trade settlements, accounting for some 85% of all transactions, a share that has changed little in the last two years. However, following the freezing of the CBR’s $300bn in reserves, the share of the dollar in global reserves has been noticeably falling and currently it accounts for 58% of globally allocated foreign exchange reserves as of December 2023 – a 25-year low as emerging markets begin to reduce their exposure to the dollar.
Trade relations with friendly countries flourish but problems remain
In the case of China this has been made easier, as Russia and China run a relatively balanced trade regime, importing and exporting almost the same amount of goods in monetary terms. Mutual trade has been growing fast and topped the $200bn turnover goal set by Russian President Vladimir Putin and Chinese President Xi Jinping a few years ago.
China is now by far Russia’s biggest trade partner and has gone a long way to offsetting the loss of trade with the EU, formerly Russia’s biggest trade partner with a pre-war trade turnover on the order of $350bn a year. Turkey has also emerged as a major trade partner and has decided not to participate in the sanctions regime on Russia.
Russia still had a $140bn trade surplus with the EU in 2023 thanks to ongoing exports of oil, gas, fertilisers and other key inputs that the EU cannot source elsewhere, as well as the various sanction exemptions won by countries like Hungary, Austria and Slovakia.
The situation with India is much more difficult, as Russia runs a very large trade surplus thanks to exploding levels of oil exports to India, whereas India exports relatively little to Russia. India’s trade deficit doubled in the first nine months of 2023 to $50bn due to these soaring oil imports, the Russian ambassador to India said in December after mutual trade between the two countries more than doubled in the first half of last year.
As a result, Russia has been building up a large excess of rupees in Indian banks that it is struggling to convert into other more useful currencies, given the rupee is only partially convertible and as that conversion process has to pass through dollars before it can be converted to another currency, that route is not available to Russia. | |||||
9245 | dbpedia | 1 | 39 | https://www.cnbc.com/2023/10/03/russian-ruble-weakens-past-symbolic-threshold-of-100-against-the-dollar.html | en | Russian ruble weakens past symbolic threshold of 100 against the dollar | [
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] | 2023-10-03T00:00:00 | The Russian ruble weakened beyond a symbolic threshold of 100 to the U.S. dollar in the early hours of Tuesday. | en | https://sc.cnbcfm.com/applications/cnbc.com/staticcontent/img/favicon.ico | CNBC | https://www.cnbc.com/2023/10/03/russian-ruble-weakens-past-symbolic-threshold-of-100-against-the-dollar.html | The Russian ruble weakened beyond a symbolic threshold of 100 to the U.S. dollar in the early hours of Tuesday as foreign currency outflows and a shrinking balance of trade continue to weigh on the currency.
The ruble recovered slightly through the morning, and was hovering just above 99.5 versus the greenback by around 8 a.m. London time.
When the ruble last weakened into triple digits in August, the Bank of Russia called an emergency meeting to hike interest rates by 350 basis points to 12%.
The decision came after President Vladimir Putin's economic advisor penned an op-ed blaming the plunging currency and acceleration of inflation on "loose monetary policy."
The central bank then increased its key rate by a further percentage point to 13% at its September meeting, citing persistently high inflationary pressure in the Russian economy.
"Significant proinflationary risks have crystallised, namely the domestic demand growth outpacing the output expansion capacity and the depreciation of the ruble in the summer months," the Bank of Russia said in a statement following the meeting.
"Therefore, it is required to additionally tighten monetary conditions to limit the upward deviation of inflation from the target and return it to 4% in 2024."
Russian inflation as of Sept. 11 rose to an annual 5.5% from 5.2% in August and 4.3% in July, and the central bank said the pressure had intensified along with the "pass-through of the ruble weakening to prices."
Though Kremlin figures have blamed loose monetary policy for the rapid depreciation of the currency, the central bank has cited a sharp decline in the country's current account surplus.
In its September report, the Bank of Russia estimated that the current account surplus of the balance of payments between January and August came in at $25.6 billion, down 86% year on year from $184.8 billion for the corresponding period in 2022. The surplus of trade balance over the same period fell by 68.3%, or $156.7 billion.
The ruble has endured a turbulent period since Russia's invasion of Ukraine in February 2022, plunging to a record low of 120 to the dollar in March 2022 before roaring to a seven-year high just a few months later, buoyed by the central bank's capital control measures and a spike in export revenue.
Exports have since been hit by Western sanctions and a reversal of trade flows, along with a resurgence in imports, weighing down the currency. | ||||
9245 | dbpedia | 3 | 77 | https://www.jpost.com/international/article-755397 | en | How Russia can re-strengthen the ruble - analysis | https://images.jpost.com/image/upload/f_auto,fl_lossy/c_fill,g_faces:center,h_407,w_690/548932 | https://images.jpost.com/image/upload/f_auto,fl_lossy/c_fill,g_faces:center,h_407,w_690/548932 | [
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] | 2023-08-20T01:04:00+00:00 | With its latest decline, the ruble is worth only one US cent. That seems humiliating for the great power that Putin deems Russia to be. | en | The Jerusalem Post | JPost.com | https://www.jpost.com/international/article-755397 | The Russian ruble has touched a key psychological barrier of 100 rubles per one US dollar. Its exchange rate is a mirror in which Russia’s sorry recent history is clearly reflected.
In the Soviet era there was constant talk in Pravda, the Communist Party newspaper, and various Marxist-Leninist economic journals, about the imminent demise of the dollar. Since Marx and Lenin had scientifically predicted the end of capitalism, it logically followed that the dollar should soon collapse.
And in fact the dollar was very sick – at least if you looked at the official ruble exchange-rate that was published daily in one of the Soviet papers. It almost never changed, and the ruble was allegedly worth $1.35, or only around 75 Soviet kopecks per dollar.
It was an excellent rate, but the problem was that you couldn’t just stop at your local branch of the State Savings Bank and exchange your rubles for dollars – or for any other currency for that matter.
And, since the ruble was not traded on any market, the exchange rate was not set by the laws of supply and demand but was arbitrarily decreed by the government.
If you were one of the few lucky Soviets allowed to travel abroad, the government would sell you foreign currency at this rate – but only a tiny amount. On the other hand, if you were an athlete, a musician or any other professional earning money abroad, you were obliged to surrender foreign currency to the government at that same rate – which in this case would turn from highly favorable to confiscatory.
Supply and demand did play a role in setting the dollar exchange rate, but only on the black market, where it could be anywhere between five and 10 rubles per dollar. However, holding foreign currency was a criminal offense. You could be packed off to jail for a long time. In the early 1960s, a group of young wheeler-dealers who bought dollars from foreigners was busted and its three leaders were sentenced to death by firing squad.
When communism collapsed, the inefficiencies of the Soviet command economy became obvious. The system was geared to make tanks and rockets but could produce nothing that people actually wanted to buy – few consumer goods, no consumer electronics, and not even decent or plentiful food. Once currency trading was decriminalized, it was the ruble that crumbled, not the dollar. This created a vicious cycle. The falling ruble led to inflation and inflation further undermined the ruble, creating even more inflation, etc. By the time the situation finally stabilized one dollar was worth 6,000 rubles.
At the start of 1998, the government effected a redenomination, slashing three zeros off the currency. That made the ruble respectable; in fact, it was then at parity with the French franc, with the exchange rate of six rubles per dollar. The problem was that in August of that year (August is a fateful month in the history of modern Russia), a financial crisis broke out and by early 1999 the dollar was worth 25 rubles.
Vladimir Putin's history
Vladimir Putin was appointed Russia’s prime minister in August 1999, which was another August disaster. In the early 2000s, he presided over a major run-up in energy prices that helped Russia achieve unprecedented prosperity. Russia became integrated into the world economy, and even ordinary Russians could travel abroad, flash their appreciating rubles and wonder why Paris, Berlin and London seemed cheap compared to Moscow.
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But Putin was pining away for the old Soviet Union, whose collapse he described in 2005 as “the greatest geopolitical catastrophe of the 20th century.” As Russia attacked Georgia, annexed Crimea, and finally, invaded Ukraine, relations with the West soured and Putin’s propaganda machine began turning back to Soviet rhetoric. Russians are now told that the West wants to destroy their country and steal its oil, that American democracy is sham and that Russia is the only country where citizens are truly free.
The imminent demise of the dollar is back as well. Washington is sinking under the burden of debt, dollars are pieces of paper not backed by any real assets, the dollar as the global reserve currency is finished and will soon be worthless.
But it has been the ruble that became worthless. Hand-in-hand with revived Soviet rhetoric came increasing isolation, a worsening business climate and declining foreign investment. Guns were increasingly produced at the expense of butter. Now that Russia has started a full-scale war in Europe and severe Western sanctions have been imposed, the ruble is plumbing the new depths.
With its latest decline, the ruble is worth only one US cent. That seems humiliating for the great power that Putin deems Russia to be. However, the Soviet experience provides not only the prediction of the demise of the greenback, but the remedy as well. All that is needed is for the ruble to stop trading, for the possession of foreign currency to be declared a felony, and for the central bank to set a more respectable exchange rate, something like $1.35 per ruble.
The writer, a New York-based economist, is a member of the US Andrei Sakharov Foundation. In 2005-08, he organized a support group for the Hebrew Immigrant Aid Society, bringing together Soviet Jewish immigrants in the United States. | |||
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] | null | Heiko Otto - Banknotes - USSR | en | Globus-50.gif | null | All presented banknotes belong to series, which were - wholly or partially - in circulation during my stays in the CIS or in the successor States of the USSR (1993). The collection does not claim to completeness or timeliness. | |||||
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] | null | [] | null | en | https://www.globocambio.co/documents/20151/31618/favicon.png/54a53a66-bc81-dbec-5206-5cee30bb0cd9?t=1667562804900 | https://www.globocambio.co/es/monedas-del-mundo/rublo-ruso | The rouble became the currency of Russia 500 years ago and it is subdivided into 100 kopeks.
Origins and history
The origins of the rouble date back to 1704, when Peter the Great standardised this coin to 28 grams of silver. On 17th December 1885 a new standard that did not change the silver rouble but reduced the gold content to 1161 grams was adopted.
Later on, during the reign of Nicholas I, the silver rouble was declared as monetary unit and main instrument of payment. Banknotes, on the other hand, were to become a supporting instrument of payment.
Despite the reforms, innovations and trials undergone by the rouble, the currency did not lose value until the Russian Revolution in 1917.
During the dissolution of the Soviet Union in 1991, the Russian currency experienced a modification in its design. At this time, the Central Bank of the Soviet Union (Gosbank) put in circulation new banknotes and coins, which were also issued by the Russian Bank in 1992. That very same year, the Bank of Russia issued its first series of Russian rouble banknotes with a nominal value of 5,000 and 10,000 roubles.
In 1993 there was a new reform that, along with the new banknotes issued, would put a stop to the circulation of soviet models.
In March 2014 the Russian rouble was introduced into the Republic of Crimea and the federal city of Sevastopol, after their annexation to the Russian Federation.
Current Russian rouble banknotes and coins
Today, banknotes in denominations of 5, 10, 50, 100, 500, 1000 and 5000 Russian roubles are in circulation.
Regarding coins, denominations of 1, 5, 10 and 50 kopeks, and 1, 2, 5 and 10 roubles are in use. | ||||
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] | null | [] | null | en | https://www.globalexchangebrasil.com.br/documents/20151/31618/favicon.png/54a53a66-bc81-dbec-5206-5cee30bb0cd9?t=1667562804900 | https://www.globalexchangebrasil.com.br/es/monedas-del-mundo/rublo-ruso | The rouble became the currency of Russia 500 years ago and it is subdivided into 100 kopeks.
Origins and history
The origins of the rouble date back to 1704, when Peter the Great standardised this coin to 28 grams of silver. On 17th December 1885 a new standard that did not change the silver rouble but reduced the gold content to 1161 grams was adopted.
Later on, during the reign of Nicholas I, the silver rouble was declared as monetary unit and main instrument of payment. Banknotes, on the other hand, were to become a supporting instrument of payment.
Despite the reforms, innovations and trials undergone by the rouble, the currency did not lose value until the Russian Revolution in 1917.
During the dissolution of the Soviet Union in 1991, the Russian currency experienced a modification in its design. At this time, the Central Bank of the Soviet Union (Gosbank) put in circulation new banknotes and coins, which were also issued by the Russian Bank in 1992. That very same year, the Bank of Russia issued its first series of Russian rouble banknotes with a nominal value of 5,000 and 10,000 roubles.
In 1993 there was a new reform that, along with the new banknotes issued, would put a stop to the circulation of soviet models.
In March 2014 the Russian rouble was introduced into the Republic of Crimea and the federal city of Sevastopol, after their annexation to the Russian Federation.
Current Russian rouble banknotes and coins
Today, banknotes in denominations of 5, 10, 50, 100, 500, 1000 and 5000 Russian roubles are in circulation.
Regarding coins, denominations of 1, 5, 10 and 50 kopeks, and 1, 2, 5 and 10 roubles are in use. | ||||
9245 | dbpedia | 3 | 36 | https://www.cbsnews.com/news/russia-ukraine-ruble-sanctions/ | en | Russia's ruble worth less than 1 cent after West tightens sanctions | [
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] | null | [] | 2022-02-28T08:04:00-05:00 | A sharp fall in Russia's currency could cause inflation in the country to surge and strain its financial system. | en | https://www.cbsnews.com/news/russia-ukraine-ruble-sanctions/ | Russia's currency is tumbling after Western nations on Saturday agreed to put crippling sanctions on the country's financial sector in retaliation for its invasion of Ukraine.
The ruble fell about 30% against the dollar Monday — making it worth less than 1 U.S. cent — after the U.S., European Union and United Kingdom announced moves to block some Russian banks from the SWIFT international payment system and to restrict Russia's use of its massive foreign currency reserves. The system is used to move billions of dollars around more than 11,000 banks and other financial institutions around the world.
The ruble recovered ground after Russia's central bank sharply raised its key interest rate Monday to shore up the currency and prevent a run on banks. But it was trading at a record low 105.27 per dollar, down from about 84 per dollar late Friday.
Early Tuesday, the ruble was at 104.51 to the dollar, down 3.2%. The Moscow Stock Exchange was closed again, as it was on Monday.
Ukraine seeks "immediate ceasefire" and Russian withdrawal in 1st direct talks during Putin's ongoing invasion
A weaker ruble could cause inflation to surge, potentially angering Russians whose budgets will be stretched by soaring prices. It will also add to strains across Russia's financial system.
A sharp devaluation of the ruble would mean a drop in the standard of living for the average Russian, economists and analysts said. Russians are still reliant on a multitude of imported goods and the prices for those items are likely to skyrocket. Foreign travel would become more expensive as their rubles buy less currency abroad. And the deeper economic turmoil will come in the coming weeks if price shocks and supply-chain issues cause Russian factories to shut down due to lower demand.
"It's going to ripple through their economy really fast," said David Feldman, a professor of economics at William & Mary in Virginia. "Anything that is imported is going to see the local cost in currency surge. The only way to stop it will be heavy subsidization."
A rapidly depreciating ruble could also slam Russian companies that need to issue debt to raise capital.
"The [ruble] has gone into a tailspin, and most Russian bonds, whether directly sanctioned or not, have seen prices drop to levels suggesting significant risk of default," analysts with TD Securities said in a research note.
Americans barred from transactions
In another move to isolate Russia's financial system, the U.S. Department of Treasury on Monday barred Americans from doing business with Russia's central bank, the country's ministry of finance and its sovereign wealth fund.
"This action effectively immobilizes any assets of the Central Bank of the Russian Federation held in the United States or by U.S. persons, wherever located," the Treasury Department announced.
U.S. officials said Germany, France, the United Kingdom, Italy, Japan, European Union and others will join in targeting the Russian central bank.
Tatiana Orlova of Oxford Economics called the moves partially cutting some Russian banks off from SWIFT and the freezing of its central bank's assets "crushing policies," noting in a report that war in Ukraine is "causing panic among Russian households and businesses."
The Ukraine crisis has caused turbulence in global financial markets. Russia's main equity market, the Moex, remained closed Monday. That appeared to be an effort to stop jittery investors from dumping their shares, according to Nicholas Cawley, strategist at DailyFX.
After surging on Friday on reports that Russian and Ukrainian leaders would meet this week, U.S. stocks were set Monday to open lower. Delegates from the two countries sat down Monday for their first direct negotiations since Russia launched its invasion five days earlier.
Capital Economics estimated in a report that Russia's gross domestic product is likely to shrink roughly 5% as a result of the sanctions on the country's economy.
People wary that sanctions would deal a crippling blow to the economy have been flocking to banks and ATMs for days, with reports in social media of long lines and machines running out of cash. Moscow's department of public transport warned city residents over the weekend that they might experience problems with using Apple Pay, Google Pay and Samsung Pay to pay fares because VTB, one of the Russian banks facing sanctions, handles card payments in Moscow's metro, buses and trams.
The Russian government will have to step in to support declining industries, banks and economic sectors, but without access to hard currencies like the U.S. dollar and euro, they may have to result to printing more rubles. It's a move that could quickly spiral into hyperinflation.
To halt the slide in the ruble, Russia's central bank on Monday hiked the benchmark interest rate to 20% from 8.5%. That followed a Western decision Sunday to freeze Russia's hard currency reserves, an unprecedented move that could have devastating consequences for the country's financial stability.
"With it now uncertain if Russia can even get their hands on their large stock of [foreign exchange] reserves (whatever the denomination), are sovereign bond holders going to get paid back?" Peter Boockvar, chief investment officer with Bleakley Advisory Group, said in a report to investors. "With the rubble down 19% today to a fresh record low against the dollar, good luck getting paid back if one holds a dollar denominated Russian bond."
The ruble lost much of its value in the early 1990s after the end of the Soviet Union, with inflation and loss of value leading the government to lop three zeros off ruble notes in 1997. Then came a further drop after a 1998 financial crisis in which many depositors lost savings and yet another plunge in 2014 due to falling oil prices and sanctions imposed after Russia seized Ukraine's Crimea peninsula.
It was unclear exactly what share of Russia's estimated $640 billion hard currency pile, some of which is held outside Russia, would be paralyzed by the decision. European officials said that at least half of it will be affected. That dramatically raised pressure on the ruble by undermining financial authorities' ability to support it by using reserves to purchase rubles. | ||||||
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"Features",
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"Russia",
"Tajikistan",
"Uzbekistan",
"Russia Invades Ukraine"
] | null | [
"Chris Rickleton"
] | 2023-08-19T16:24:14+00:00 | An emergency rate hike has helped to prop up the ruble after it dipped below 100 to the dollar earlier this week. But the currency's long-term weakness is still a problem for the countries of Central Asia, which have strong trade and migration ties to Russia. | en | /Content/responsive/RFE/img/webApp/favicon.svg | RadioFreeEurope/RadioLiberty | https://www.rferl.org/a/russia-weak-ruble-central-asia/32555300.html | ALMATY, Kazakhstan -- Bakytbek Ysmanov, a 64-year-old native of Kyrgyzstan, has been working in Russia for 15 years.
In the past 12 months he has watched the ruble fall by 28 percent against his homeland's national currency, the som, with that slide in value picking up pace this summer.
That is a big problem for Ysmanov because he needs to pay off a mortgage in soms that he has on a home in the southern Kyrgyz city of Osh.
"Maybe I will have to work 15 hours [a day now] and find other jobs, too. Maybe I could work construction for four or five hours and then go out to drive a taxi again," Ysmanov told RFE/RL's Central Asian Migrant Unit.
"You work until 11 or 12 at night. When you feel sleepy, you just wash your face with cold water and continue working. What can I do? I have a mortgage to pay," Ysmanov said, adding that he hoped Kyrgyz banks would soon offer debt prolongation options for migrants working in Russia.
This week the plummeting ruble showed a flicker of life on the back of a giant emergency rate hike overseen by Russia's central bank after it had dipped below the psychologically important threshold of 100 rubles to the dollar.
And it's not just officials in the Kremlin who breathed a sigh of relief.
For Central Asian countries, the ruble has outsized importance due to the region's level of economic integration with Moscow and because of the millions of migrants from the region -- chiefly from Kyrgyzstan, Tajikistan, and Uzbekistan -- that earn money in Russia.
But while the currency might have reached its bottom in the near term, stabilizing at around 93 to the dollar after the hike, its longer-term health remains a major source of concern for a landlocked region perennially exposed to Russian crises.
In the meantime, the cheap ruble is already wreaking havoc in Central Asian economies and contributing to a significant fall in the amount of money sent back to the region.
Between Depreciation And The Devil
The Russian currency's monthslong decline stretching back to the end of last year is partly due to government spending on the war in Ukraine, where Russian forces have been in a slow retreat since the full-scale invasion began in February 2022 as they now battle a fierce Ukrainian counteroffensive.
What makes this particular ruble depreciation so notable, however, is that it comes at a time of robust prices for oil, which have traditionally helped the currency bounce back.
On August 15, Russia's central bank hiked its base rate by an eyebrow-raising 3.5 percentage points to reach 12 percent, helping to stop the ruble's rot.
But there has been no spectacular recovery like there was in the weeks and months immediately after Moscow launched its war against Ukraine.
And the days of the ruble going from freefall to the world's best-performing currency overnight -- a development attributed to stringent capital controls and a trade surplus buoyed by high prices for Russian exports -- now seem a very long way away.
Indeed, the ruble is so cheap that it is posing a dilemma for neighboring countries caught between a potential flood of Russian imports and politically contentious decisions to allow their own currencies to follow suit.
Oil-rich Kazakhstan's tenge depreciated 6 percent on August 16-17, RFE/RL's Kazakh Service reported, with the rate reaching 467 tenge to the dollar at currency exchanges on August 17.
In the recent past, the tenge has traced the ruble's performance quite tightly.
Kazakhstan is a member of the Eurasian Economic Union dominated by Russia and, like Moscow, Astana's growth prospects are tied to prices for its energy exports.
But last year saw the tenge "successfully decouple" from the ruble, in the words of the economics-focused Telegram channel Tengenomika, as Russia's share of Kazakhstan's imports fell from over 40 percent in 2021 to 26.7 percent in 2022.
How long that can be sustained is unclear.
In a Facebook post this week, Kazakh political commentator Serik Belgibay fumed that the ruble was "burying" Kazakhstan's economy and leaving the country with "two options, both bad."
"[We can] leave everything as it is. Then the cheap ruble will gradually kill domestic production. Or [we can] allow the tenge to devalue to the level of five tenge to the ruble. This would further impoverish our citizens and cause prices to rise," Belgibay vented.
In Uzbekistan, the cost of the dollar at currency exchanges has risen around 3 percent in the last week, with the central bank blaming "significant depreciation of the currencies of [Uzbekistan's] main trade partners."
Uzbekistan's som currency "will be relatively stable till the end of the year and in the medium-term perspective," the central bank predicted rather optimistically.
Decision Time For Migrants?
In more impoverished Tajikistan and Kyrgyzstan, national currencies have lost less than 1 percent of their value against the dollar since the beginning of the summer, while posting gains of around 14 percent against the ruble.
But for many families in two of the world's most remittance-dependent nations, where cash transfers from Russia typically equal more than a quarter of the GDP, the weak ruble is nothing to celebrate.
On August 15, citing interviews with Uzbek diaspora leaders, the Russian business daily Vedomosti speculated that a potentially massive migrant exodus from Russia might be imminent if the ruble doesn't start rising in value soon.
The publication quoted an online poll of 23,000 mostly Uzbek migrants in which over half said that they were actively considering this option.
Recent years have contained no shortage of unpleasant surprises for Central Asians working in Russia.
The pandemic was brutal, with sudden layoffs sending nationals from the region back home in their tens of thousands to economies where jobs were few.
But those disruptions have arguably been eclipsed by blowback from the Ukraine invasion, which has seen migrants aggressively targeted in a Russian military recruitment drive.
The ruble, for a time, was a bright spot.
Having plummeted to around 150 to the dollar in the weeks following the invasion, the currency soared well above its prewar level of around 75 to the dollar, peaking at just over 52 in June 2022.
This contributed to record-breaking remittances for Central Asian countries, confounding predictions made by the World Bank and other international institutions at the beginning of the war.
But 2023 is probably going to be a different story.
While not all of Central Asia's central banks publish regular data on money transfers, the latest data suggest that families across the region are already receiving much less from their relatives abroad than they did last year.
This month, for instance, the Kyrgyz central bank published figures that showed $163.5 million was transferred to Kyrgyzstan from foreign countries in June 2023, with transfers from Russia accounting for more than 90 percent of the total.
That figure is just over half of the figure posted in the same month last year and also significantly smaller than figures for more typical years like 2021 ($266.9 million), 2020 ($277.9 million) and 2019 ($191.6 million). | ||||
9245 | dbpedia | 0 | 62 | https://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/ruble-zone | en | Encyclopedia.com | [
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] | [] | [] | [
"RUBLE ZONE\n\"Ruble zone\" refers to the accidental currency union that emerged when the Soviet Union broke up in December 1991",
"after which several independent states (former republics) each used the ruble as their primary currency."
] | null | [] | null | RUBLE ZONE
"Ruble zone" refers to the accidental currency union that emerged when the Soviet Union broke up in December 1991, after which several independent states (former republics) each used the ruble as their primary currency. Source for information on Ruble Zone: Encyclopedia of Russian History dictionary. | en | /sites/default/files/favicon.ico | https://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/ruble-zone | RUBLE ZONE
"Ruble zone" refers to the accidental currency union that emerged when the Soviet Union broke up in December 1991, after which several independent states (former republics) each used the ruble as their primary currency. This sparked an intense debate among the Central Bank of Russia (CBR), the Russian government, the other post-Soviet governments, and the international financial institutions over the pros and cons of retaining the ruble zone. The ruble zone at first encompassed all fifteen former Soviet republics, grew progressively smaller through 1992 and 1993 as the new states introduced their own currencies, and disappeared completely in 1995 when Tajikistan adopted the Tajik ruble as its sole legal tender. The three Baltic states, having no intention of staying in the ruble zone, introduced their own currencies in mid-1992, but the other post-Soviet states initially chose to remain.
The ruble zone's existence presented a significant dilemma for the CBR, because it prevented the CBR from controlling the Russian money supply. Only the CBR could print cash rubles, because all of the printing presses were on Russian territory. However, a legacy of the Soviet-style currency system (called the dual monetary circuit) allowed any central bank in the ruble zone to freely issue ruble credits to its domestic banks. These banks then loaned the credits to domestic enterprises, which could in turn use them to purchase goods from other ruble zone states (primarily Russia). In effect, the ruble zone states self-financed their trade deficits with Russia through these credit emissions. In addition, several ruble zone states issued socalled "coupons" or parallel currencies to circulate alongside the ruble in 1992 and 1993, thereby increasing the cash money supply in the ruble zone as well.
In an attempt to mitigate the impact of this credit expansion on the Russian economy, as of July 1992 the CBR began keeping separate ruble credit accounts for each state. In August 1992 it announced that Russian goods could be purchased only with CBR-issued credits, and it suspended the other banks' credit-granting privileges entirely in May 1993. During this process, Ukraine and Kyrgyzstan left the ruble zone. The CBR then fatally undermined the ruble zone through a currency reform in July 1993. It began to print new Russian ruble notes (circulating at equivalency with the old Soviet ones) in early 1993, but did not send these new rubles to the other states; they received their cash shipments solely in Soviet rubles. On July 24, the CBR announced that all pre-1993 ruble notes would become invalid in Russia, forcing the other ruble zone members either to leave or to cede all monetary sovereignty to the CBR. Azerbaijan and Georgia left the ruble zone immediately, while Armenia, Belarus, Kazakhstan, Moldova, Turkmenistan, and Uzbekistan left in November 1993 after talks on creating a ruble zone of a new type broke down. Although this effectively destroyed the ruble zone, its formal end came in May 1995 when war-torn Tajikistan finally introduced its own currency.
See also: monetary system, soviet; ruble
bibliography
Abdelal, Rawi. (2001). National Purpose in the World Economy: Post-Soviet States in Comparative Perspective. Ithaca, NY: Cornell University Press.
Chavin, James. (1995). "The Disintegration of the Soviet Ruble Zone, 1991–1995." Ph.D. diss. Berkeley, CA: University of California, Berkeley.
Goldberg, Linda; Ickes, Barry; and Ryterman, Randi. (1994). "Departures from the Ruble Zone: The Implications of Adopting Independent Currencies." World Economy 17 (3):239–322.
Johnson, Juliet. (2000). A Fistful of Rubles: The Rise and Fall of the Russian Banking System. Ithaca, NY: Cornell University Press.
Juliet Johnson | |||||
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""
] | null | [] | null | /static/longread/1/src/f/media/favicons/apple-touch-icon-57x57.png | null | In 1860, the Emperor of Russia Alexander II signed a decree to establish the State Bank. This was the beginning of the history of the Bank of Russia. Initially, the State Bank was mainly engaged in short-term commercial lending. However, historical developments changed everything. In the 1920s, the bank was a key actor in the restoration of the country’s financial system and the development of exchange relationships. During the hardships of World War I and the Great Patriotic War, it focused on covering military expenditures and the supply of the army and households with money. In the Soviet Union, the State Bank was a lender for the centrally planned economy, issued money and carried out international settlements. In the challenging 1990s, the bank did its best to keep the economy stable and created the system of foreign exchange regulation and control. Following traditions and extensively introducing innovations, today the Bank of Russia is a technologically advanced mega-regulator responsible for the stability of the entire financial system of the country. | |||||||
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] | 2003-05-25T12:10:27+00:00 | en | /static/apple-touch/wikipedia.png | https://en.wikipedia.org/wiki/Russian_ruble | Currency of Russia
This article is about the currency of the modern Russian Federation. For the currencies of the Russian Empire and the Soviet Union, see Ruble.
RubleРоссийский рубль (Russian)[a]
руб, Rub
ISO 4217CodeRUB (numeric: 643)Subunit 0.01UnitUnitrublePluralThe language(s) of this currency belong(s) to the Slavic languages. There is more than one way to construct plural forms.Symbol₽DenominationsSubunit 1⁄100kopeyka (копейка)[b]Symbol kopeyka (копейка)[b]коп. or к (Cyrillic)
kop or k (Latin)Banknotes Freq. used5 ₽, 10 ₽, 50 ₽, 100 ₽, 200 ₽, 500 ₽, 1,000 ₽, 2,000 ₽, 5,000 ₽Coins Freq. used1 ₽, 2 ₽, 5 ₽, 10 ₽ Rarely used1 kop, 5 kop, 10 kop, 50 kop, 25 ₽DemographicsDate of introduction14 July 1992:
RUR (1 SUR = 1 RUR)
1 January 1998:
RUB (1,000 RUR = 1 RUB)ReplacedSoviet ruble (SUR)Official user(s)RussiaUnofficial user(s)Abkhazia, South OssetiaIssuanceCentral bankBank of Russia Websitewww .cbr .ruPrinterGoznak Websitewww .goznak .ruMintMoscow Mint and Saint Petersburg MintValuationInflation7.4% (December 2023) SourceBank of Russia MethodCPI
The ruble or rouble[c] (Russian: рубль, romanized: rublʹ; symbol: ₽; abbreviation: руб or р. in Cyrillic, Rub in Latin;[1] ISO code: RUB) is the currency of the Russian Federation. The ruble is subdivided into 100 kopecks (sometimes written as copeck or kopek; Russian: копе́йка, romanized: kopeyka, pl. копе́йки, kopeyki). It is used in Russia as well as in the parts of Ukraine under Russian military occupation and in Russian-occupied parts of Georgia.
The ruble was the currency of the Russian Empire and of the Soviet Union (as the Soviet ruble). In 1992, the currency imagery underwent a redesign as a result of the fall of the Soviet Union. The first Russian ruble (code: RUR) replaced the Soviet ruble (code: SUR) in September 1993 at par.
On 1 January 1998, preceding the Russian financial crisis, the ruble was redenominated with the new code "RUB" and was exchanged at the rate of 1 RUB = 1,000 RUR.
History
[edit]
Main article: Ruble
The ruble has been used in the Russian territories since the 14th century,[2] and is the second-oldest currency still in circulation, behind sterling.[3] Initially an uncoined unit of account, the ruble became a circulating coin in 1704 just before the establishment of the Russian Empire. It was also the first currency in Europe to be decimalised in 1704, when it was divided into 100 kopecks. The ruble has seen several incarnations and redenominations during its history, the latest of which is the introduction in 1998 of the current Russian ruble (code: RUB) at the rate of 1 RUB = 1,000 RUR.
RUR (1992–1998)
[edit]
Following the dissolution of the Soviet Union in 1991, the Soviet ruble remained the currency of the Russian Federation until 1992. A new set of coins was issued in 1992 and a new set of banknotes was issued in the name of Bank of Russia in 1993. The currency replaced the Soviet ruble at par and was assigned the ISO 4217 code RUR and number 810.
The ruble's exchange rate versus the U.S. dollar depreciated significantly from US$1 = 125 RUR in July 1992 to approximately US$1 = 6,000 RUR when the currency was redenominated in 1998.
RUR coins
[edit]
After the fall of the Soviet Union, the Russian Federation introduced new coins in 1992 in denominations of 1, 5, 10, 20, 50, and 100 rubles. The coins depict the double-headed eagle without a crown, sceptre and globus cruciger above the legend "Банк России" ("Bank of Russia"). It is exactly the same eagle that the artist Ivan Bilibin painted after the February Revolution as the coat of arms for the Russian Republic.[4] The 1 and 5-ruble coins were minted in brass-clad steel, the 10 and 20-ruble coins in cupro-nickel, and the 50 and 100-ruble coins were bimetallic (aluminium-bronze and cupro-nickel-zinc). In 1993, aluminium-bronze 50-ruble coins and cupro-nickel-zinc 100-ruble coins were issued, and the material of 10 and 20-ruble coins was changed to nickel-plated steel. In 1995 the material of 50-ruble coins was changed to brass-plated steel, but the coins were minted with the old date 1993. As high inflation persisted, the lowest denominations disappeared from circulation and the other denominations became rarely used.
During this period, the commemorative one-ruble coins were regularly issued continuing the specifications of prior commemorative Soviet rubles (31 mm diameter, 12.8 grams cupronickel). It is nearly identical to those of the 5-Swiss franc coin (31.45 mm, 13.2 g cupronickel), worth approx. €4.39 or US$5.09 as of August 2018. For this reason, there have been several instances of (now worthless) Soviet and Russian ruble coins being used on a large scale to defraud automated vending machines in Switzerland.[5]
RUR banknotes
[edit]
In 1961, new State Treasury notes were introduced for 1, 3 and 5 rubles, along with new State Bank notes worth 10, 25, 50, and 100 rubles. In 1991, the State Bank took over production of 1, 3 and 5-ruble notes and also introduced 200, 500 and 1,000-ruble notes, although the 25-ruble note was no longer issued. In 1992, a final issue of notes was made bearing the name of the USSR before the Russian Federation introduced 5,000 and 10,000-ruble notes. These were followed by 50,000-ruble notes in 1993, 100,000 rubles in 1995 and, finally, 500,000 rubles in 1997 (dated 1995).
Since the dissolution of the Soviet Union in 1991, Russian ruble banknotes and coins have been notable for their lack of portraits, which traditionally were included under both the Tsarist and Communist regimes. With the issue of the 500-ruble note depicting a statue of Peter I and then the 1,000-ruble note depicting a statue of Yaroslav, the lack of recognizable faces on the currency has been partially alleviated.
SUR and RUR series banknotes Series Value Obverse Reverse Issuer Languages 1961 1, 3, 5, 10, 25, 50, 100 rubles Vladimir Lenin or views of the Moscow Kremlin Value, and views of the Moscow Kremlin for 50 rubles or higher USSR multiple 1991 1, 3, 5, 10, 50, 100, 200, 500, 1,000 rubles Russian 1992 50, 200, 500, 1,000, 5,000, 10,000 rubles
USSR for 1,000 rubles and lower
Bank of Russia for 5,000- and 10,000 rubles
Russian 1993 100, 200, 500, 1,000, 5,000, 10,000, 50,000 rubles Moscow Kremlin with the tri-color Russian flag Bank of Russia 1995 1,000, 5,000, 10,000, 50,000, 100,000, 500,000 rubles Same design as today's banknotes, where 1 RUB = 1,000 RUR. The 1,000 ruble note did not continue as a 1 new ruble note.
RUB (1998–present)
[edit]
In 1998, the Russian ruble was redenominated with the new ISO 4217 code "RUB" and number 643 and was exchanged at the rate of 1 RUB = 1,000 RUR. All Soviet coins issued between 1961 and 1991, as well as 1-, 2- and 3-kopeck coins issued before 1961, also qualified for exchange into new rubles.[6]
The redenomination was an administrative step that reduced the unwieldiness of the old ruble[7] but occurred on the brink of the 1998 Russian financial crisis.[8] The ruble lost 70% of its value against the US dollar in the six months following this financial crisis, from US$1 = 6 ₽ to approximately 20 ₽.[9]
After stabilizing at around US$1 = 30 ₽ from 2001 to 2013, it depreciated to the range of US$1 = 60-80 ₽ from 2014 to 2021 as a result of the Annexation of Crimea by the Russian Federation in 2014 and the 2010s oil glut. After the 2022 Russian invasion of Ukraine, it declined further to US$1 = 110 ₽ due to sanctions.[10]
The ruble was subject to fluctuation when, in April 2022, the ruble went above its pre-war level after falling as low as 150 ₽ per dollar in early March,[11] with the longer-term trend showing a steady decline from mid-2022 to mid-2023, falling from 60 ₽ to 90 ₽ per dollar.[12]
On 15 July 2024 the Central Bank of the Russian Federation closed the statistics of the over-the-counter currency market,[13] and three days later the sale of ruble-note artwork on toilet paper was banned by a judge from Moscow.[14]
Symbol
[edit]
Main article: Ruble sign
Not to be confused with the Armenian letter ք.
A currency symbol was used for the ruble between the 16th century and the 18th century. The symbol consisted of the Russian letters "Р" (rotated 90° anti-clockwise) and "У" (written on top of it). The symbol was placed over the amount number it belonged to.[15] This symbol, however, fell into disuse by the mid-19th century.[16]
No official symbol was used during the final years of the Empire, nor was one introduced in the Soviet Union. The abbreviations Rbl (plural: Rbls) in Latin[17][18] and руб. (Cyrillic) and the simple characters R (Latin)[19][20][21] and р (Cyrillic) were used. These are still used today, though are unofficial.[22]
In July 2007, the Central Bank of Russia announced that it would decide on a symbol for the ruble and would test 13 symbols. This included the symbol РР (the initials of Российский Рубль "Russian ruble"), which received preliminary approval from the Central Bank.[23] However, one more symbol, a Р with a horizontal stroke below the top similar to the Philippine peso sign, was proposed unofficially.[23] Proponents of the new sign claimed that it is simple, recognizable and similar to other currency signs.[24][25][26] This symbol is also similar to the Armenian letter ք or the Latin letter Ꝑ.
On 11 December 2013, the official symbol for the ruble became , a Cyrillic letter Er with a single added horizontal stroke,[27][better source needed] though the abbreviation "руб." is in wide use.
On 4 February 2014, the Unicode Technical Committee during its 138th meeting in San Jose accepted U+20BD ₽ RUBLE SIGN symbol for Unicode version 7.0;[28] the symbol was then included into Unicode 7.0 released on 16 June 2014.[29] In August 2014, Microsoft issued updates for all of its mainstream versions of Microsoft Windows that enabled support for the new ruble sign.[30]
The ruble sign can be entered on a Russian computer keyboard as AltGr+8 on Windows and Linux, or AltGr+Р (Qwerty H position) on macOS.
Coins
[edit]
In 1998, the following coins were introduced in connection with the ruble revaluation and are currently in circulation:
Currently circulating coins[31] Image Value Technical parameters Description Years of minting Reverse Obverse Diameter Mass Composition Edge Obverse Reverse 1 kop 15.5 mm 1.5 g[32] Cupronickel-steel Plain Saint George Value
1997–2009
2014, 2017
5 kop 18.5 mm 2.6 g[32] 10 kop 17.5 mm 1.95 g[32] Brass Reeded Saint George Value 1997–2006 1.85 g Brass-plated steel Plain 2006–2015 50 kop 19.5 mm 2.90 g[32] Brass Reeded 1997–1999
2002–2006 2.75 g Brass-plated steel Plain 2006–2015 1 ₽ 20.5 mm 3.25 g Cupronickel Reeded Emblem of the Bank of Russia Value
1997–1999
2005–2009
3.00 g Nickel-plated steel 2009–2015 Coat of arms of Russia 2016–present 2 ₽ 23 mm 5.10 g Cupronickel Segmented (Plain and Reeded edges) Emblem of the Bank of Russia
1997–1999
2006–2009
5.00 g Nickel-plated steel 2009–2015 Coat of arms of Russia 2016–present 5 ₽ 25 mm 6.45 g Cupronickel-clad copper Emblem of the Bank of Russia
1997–1998
2008–2009
6.00 g Nickel-plated steel 2009–2015 Coat of arms of Russia 2016–present 10 ₽ 22 mm 5.63 g Brass-plated steel Segmented (plain and reeded edges) Emblem of the Bank of Russia Value 2009–2013, 2015 Coat of arms of Russia 2016–present
Kopeck coins are rarely used due to their low value and in some cases may not be accepted by stores or individuals.
These coins were issued starting in 1998, although some of them bear the year 1997. Kopeck denominations all depict St George and the Dragon, and all ruble denominations (with the exception of commemorative pieces) depict the double headed eagle. Mint marks are denoted by "СП" or "M" on kopecks and the logo of either the Saint Petersburg or Moscow mint on rubles. Since 2000, many bimetallic 10 ₽ circulating commemorative coins have been issued. These coins have a unique holographic security feature inside the "0" of the denomination 10.[citation needed]
In 2008, the Bank of Russia proposed withdrawing 1 and 5 kopeck coins from circulation and subsequently rounding all prices to multiples of 10 kopeks, although the proposal has not been realized yet (though characteristic "x.99" prices are treated as rounded in exchange).[citation needed] The Bank of Russia stopped minting one-kopeck and five-kopeck coins in 2012, and kopecks completely in 2018.[33]
The material of 1 ₽, 2 ₽ and 5 ₽ coins was switched from copper-nickel-zinc and copper-nickel clad to nickel-plated steel in the second quarter of 2009. 10 and 50 kopecks were also changed from brass to brass-plated steel.[citation needed]
In October 2009, a new 10 ₽ coin made of brass-plated steel was issued, featuring optical security features.[34] The 10 ₽ banknote would have been withdrawn in 2012, but a shortage of 10 ₽ coins prompted the Central Bank to delay this and put new ones in circulation.[35] Bimetallic commemorative 10-ruble coins will continue to be issued.[citation needed]
A series of circulating Olympic commemorative 25 ₽ coins started in 2011. The new coins are struck in cupronickel.[36] A number of commemorative smaller denominations of these coins exist in circulation as well, depicting national historic events and anniversaries.
The Bank of Russia issues other commemorative non-circulating coins ranging from 1 ₽ to 50,000 ₽.[37]
Banknotes
[edit]
On 1 January 1998, a new series of banknotes dated 1997 was released in denominations of 5 ₽, 10 ₽, 50 ₽, 100 ₽ and 500 ₽. The 1,000 ₽ banknote was first issued on 1 January 2001 and the 5,000 ₽ banknote was first issued on 31 July 2006. Modifications to the series were made in 2001, 2004, and 2010.
In April 2016, the Central Bank of Russia announced that it will introduce two new banknotes – 200 ₽ and 2,000 ₽ — in 2017.[38] In September 2016, a vote was held to decide which symbols and cities will be displayed on the new notes.[39] In February 2017, the Central Bank of Russia announced the new symbols. The 200 ₽ banknote will feature symbols of Crimea: the Monument to the Sunken Ships, a view of Sevastopol, and a view of Chersonesus. The 2,000 ₽ banknote will bear images of the Russian Far East: the bridge to Russky Island and the Vostochny Cosmodrome in the Amur Oblast.[40]
In 2018, the Central Bank issued a 100 ₽ "commemorative" banknote designed to recognize Russia's role as the host of the 2018 World Cup soccer tournament. The banknote is printed on a polymer substrate, and has several transparent portions as well as a hologram. Despite the note being intended for legal tender transactions, the Central Bank has simultaneously refused to allow the country's automated teller machines (ATMs) to recognize or accept it.[41]
In March 2021, the Central Bank announced plans to gradually update the designs of the 10 ₽, 50 ₽, 100 ₽, 1,000 ₽ and 5,000 ₽ banknotes and make them more secure; this is expected to be completed in 2025.[42]
The first new design, for the 100 ₽ note, was unveiled on 30 June 2022.[43] The design of the new note includes symbols of Moscow on the obverse - Red Square, Zaryadye Park, Moscow State University on Sparrow Hills, and Ostankino Tower - and the Rzhev Memorial to the Soviet Soldier on the reverse.[44]
In late 2022, the Central Bank resumed the printing of 5-ruble and 10-ruble notes for circulation; freshly printed notes began appearing in 2023.[45]
1997 series[46] Image Value Dimensions Description Dates Obverse Reverse Town Obverse Reverse Watermark Printing* Issue Withdrawal Lapse 5 ₽ 137 × 61 mm Veliky Novgorod The Millennium of Russia monument on background of Saint Sophia Cathedral Fortress wall of the Novgorod Kremlin "5", Saint Sophia Cathedral 1997
2022
1 January 1998 Current, but not issued from 2001 until 2021.
Re-issued in 2022. Rarely seen in circulation. Returned to circulation in 2023.[45]
10 ₽ 150 × 65 mm Krasnoyarsk Kommunalny Bridge across the Yenisei River, Paraskeva Pyatnitsa Chapel Krasnoyarsk hydroelectric plant "10", Paraskeva Pyatnitsa Chapel
1997
2001
2004
2022
Current, but not issued from 2010 to 2021.
Re-issued in 2022. Still in use, but rarely seen in circulation. Returned to circulation in 2023.[45]
50 ₽ Saint Petersburg A Rostral Column sculpture on background of Peter and Paul Fortress Old Saint Petersburg Stock Exchange and Rostral Columns "50", Peter and Paul Cathedral Current 100 ₽ Moscow Quadriga statue on the portico of the Bolshoi Theatre The Bolshoi Theatre "100", The Bolshoi Theatre 500 ₽ Arkhangelsk Monument to Czar Peter the Great, sailing ship and sea terminal[47] Solovetsky Monastery "500", portrait of Peter the Great
1997
2001
2004
2010
1,000 ₽ 157 × 69 mm Yaroslavl Monument to Yaroslav I the Wise and the Lady of Kazan Chapel John the Baptist Church "1,000", portrait of Yaroslav the Wise
2001
2004
2010
1 January 2001 5,000 ₽ Khabarovsk Monument to Nikolay Muravyov-Amursky Khabarovsk Bridge over the Amur "5,000", portrait of Muravyov-Amursky
2006
2010
31 July 2006 These images are to scale at 0.7 pixel per millimetre. For table standards, see the banknote specification table.
Each new banknote series has enhanced security features, but no major design changes. Banknotes printed after 1997 bear the fine print "модификация 2001г." (or later date) meaning "modification of year 2001" on the left watermark area.
2017–2025 series[46] Image Value Dimensions Description Date of Obverse Reverse Federal District Obverse Reverse Watermark printing issue withdrawal lapse 100 ₽ 150 × 65 mm Central Federal District Moscow: Spasskaya Tower, Zaryadye Park, Moscow State University, Ostankino Tower Memorial to the Soviet Soldier, Rzhev, Tver Oblast; Kulikovo Field, Tula Oblast "100", Spasskaya Tower 2022 30 June 2022 Current 200 ₽ 150 × 65 mm Southern Federal District Monument to the Sunken Ships (by sculptor Amandus Adamson), Sevastopol View of Chersonesus "200", Monument to the Sunken Ships 2017 12 October 2017 1,000 ₽ 157 × 69 mm Volga Federal District Nizhny Novgorod: Nikolskaya Tower of the Nizhny Novgorod Kremlin, Nizhny Novgorod Fair, Spit of Nizhny Novgorod, Nizhny Novgorod Stadium Museum of the History of Statehood of the Tatar People and the Republic of Tatarstan in Kazan, Söyembikä Tower on the Kazan Kremlin, Museum of Archeology and Ethnography in Ufa "1000", Nikolskaya Tower of the Nizhny Novgorod Kremlin 2023 16 October 2023 2,000 ₽ 157 × 69 mm Far Eastern Federal District Vladivostok: Russky Bridge, Far Eastern Federal University Vostochny Cosmodrome, Tsiolkovsky, Amur Oblast "2000", Russky Bridge 2017 12 October 2017 5,000 ₽ 157 × 69 mm Ural Federal District Yekaterinburg: Stele "Europe - Asia", Iset Tower in Yekaterinburg-City, Vysotsky, Yekaterinburg Circus, House of Communications (main post office building), Palace of Sporting Games, Sevastyanov's House Monument "Tale of the Urals" in Chelyabinsk, metallurgical plant, stele "66 parallel" (Arctic Circle) in Salekhard, oil and gas industry facilities "5000", House of Communications (main post office building), Sevastyanov's House 2023 16 October 2023
For the rest of the 2017–2025 series, the following designs are planned:[48]
10 ₽ (2025): Novosibirsk on the obverse, Siberian Federal District on the reverse
50 ₽ (2025): Saint Petersburg on the obverse, Northwestern Federal District on the reverse
500 ₽ (2024): Pyatigorsk on the obverse, North Caucasian Federal District on the reverse.
Printing
[edit]
All Russian ruble banknotes are currently printed at the state-owned factory Goznak in Moscow, which was founded on 6 June 1919 and operated ever since. Coins are minted in the Moscow Mint and at the Saint Petersburg Mint, which has been operating since 1724.
100 ₽ note controversy
[edit]
On 8 July 2014, State Duma deputy and vice-chairman of the Duma Regional Political Committee Roman Khudyakov alleged that the image of the Greek god Apollo driving a Quadriga on the portico of the Bolshoi Theatre in Moscow on the 100 ₽ banknote constitutes pornography that should only be available to persons over the age of 18. Since it is impractical to limit the access of minors to banknotes, he requested in his letter to the Governor of the Bank of Russia Elvira Nabiullina to immediately change the design of the banknote.[49]
Khudyakov, a member of parliament for the LDPR party stated, "You can clearly see that Apollo is naked, you can see his genitalia. I submitted a parliamentary request and forwarded it directly to the head of the central bank asking for the banknote to be brought into line with the law protecting children and to remove this Apollo."[50][51] Khudyakov's efforts did not lead to any changes being made to the design.
Crimea controversy
[edit]
On 13 October 2017, the National Bank of Ukraine issued a decree forbidding the country's banks, other financial institutions and Ukraine's state postal service to circulate Russian banknotes which use images of Crimea, a territory that is regarded as Russian-occupied by Ukraine and whose annexation by Russia is not recognised by most UN member states.[52] The NBU stated that the ban applies to all financial operations, including cash transactions, currency exchange activities and interbank trade.[53] Crimea is featured on three banknotes that are currently in circulation – the 100 ₽ commemorative notes issued in 2015 and 2018, as well as the 200 ₽ note issued in 2017.
1,000 ₽ note controversy
[edit]
On 16 October 2023, the day of unveilling of the new design of the 1,000-ruble note, the design of the note was criticised by the Russian Orthodox Church for displaying the Islamic crescent on one of the buildings on the reverse of the note at the same time as excluding the Orthodox cross from a different building (a former church that is now a museum).[54] The Bank of Russia claimed that the image was not selected to provoke or disregard any faith, but announced on the following day that the design would be revised and the notes would not be printed.[citation needed]
Effect of international sanctions
[edit]
Kommersant reported that the new 100 ₽ note introduced in 2022 will not work with an estimated 60% of cash registers and bank machines because they are imported and therefore must be updated by foreign companies, and this work may not be completed due to sanctions.[55][56] However, Russian banks have been transferring their ATM networks to domestic software which does not require foreign specialists since at least 2018, with the biggest Russian bank, Sberbank, completing 80% of the transfer by June 2022.[57] Russian banks will start purchasing domestic ATMs with Elbrus processors in 2023, the mandatory share of Russian products in the purchase of ATMs was to be at least 18% for banks with state partnership, since 2022 it has grown to 20%.[58]
Commemorative banknotes
[edit]
Commemorative banknote series[59] Image Value Dimensions Description Dates Obverse Reverse Obverse Reverse Watermark Printing* Issue Withdrawal Lapse 100 ₽ 150 × 65 mm A snowboarder and some of the Olympic venues of the Sochi coastal cluster. Fisht Olympic Stadium in Sochi, firebird 2014 Winter Olympics logo 2014 30 October 2013 Current 100 ₽ 150 × 65 mm Monument to the Sunken Ships in Sevastopol Bay, outlines of Monument to the heroes of the Second Siege of Sevastopol and St. Vladimir Cathedral, fragment of a painting by Ivan Aivazovsky Swallow's Nest castle, Yevpatoria RT-70 radio telescope, outline of Big Khan Mosque in Bakhchisaray and a green stripe containing a QR code linking to the Bank of Russia webpage containing historical information relating to the commemorative banknote Portrait of Empress Catherine the Great 2015 23 December 2015 100 ₽ 150 × 65 mm A boy with a ball under his arm looking up as Lev Yashin saves a ball. A stylized image of the globe in the form of a football with a green image of Russia's territory (including Crimea) outlined on it, as well as the name of the 2018 FIFA World Cup host cities The number 2018 2018 22 May 2018
On 30 October 2013, a special banknote in honour of the 2014 Winter Olympics held in Sochi was issued. The banknote is printed on high-quality white cotton paper. A transparent polymer security stripe is embedded into the paper to make a transparent window incorporating an optically variable element in the form of a snowflake. The highlight watermark is visible in the upper part of the banknote. Ornamental designs run vertically along the banknote. The front of the note features a snowboarder and some of the Olympic venues of the Sochi coastal cluster. The back of the note features the Fisht Olympic Stadium in Sochi. The predominant colour of the note is blue.
On 23 December 2015, another commemorative 100 ₽ banknote was issued to celebrate the "reunification of Crimea and Russia". The banknote is printed on light-yellow-coloured cotton paper. One side of the note is devoted to Sevastopol, the other one — to Crimea. А wide security thread is embedded into the paper. It comes out on the surface on the Sevastopol side of the banknote in the figure-shaped window. A multitone combined watermark is located on the unprinted area in the upper part of the banknote. Ornamental designs run vertically along the banknote. The Sevastopol side of the note features the Monument to Sunken Ships in Sevastopol Bay and a fragment of the painting "Russian Squadron on the Roads of Sevastopol" by Ivan Aivazovsky. The Crimea side of the note features the Swallow's Nest, a decorative castle and local landmark. In the lower part of the Sevastopol side of the banknote in the green stripe there is a QR-code containing a link to the Bank of Russia's webpage, which lists historical information related to the banknote. The predominant colour of the note is olive green.
On 22 May 2018, a special banknote to celebrate the 2018 FIFA World Cup was issued.[60] The banknote is printed on polymer. The top part of the note bears a transparent window that contains a holographic element. The design of the note is vertically oriented. The main images of the obverse are a boy with a ball under his arm and a goalkeeper diving for a ball. The main image of the reverse is a stylized image of the globe in the form of a football with green image of the Russian territory outlined on it. On the reverse there is the number 2018 that marks both the issue of the banknote and the World Cup, as well as the name of the host cities in the Russian language. The bottom right corner of the obverse bears a QR-code, which contains a link to the page of the Bank of Russia website with the description of the note's security features. Predominant colours of the note are blue and green.
Economics
[edit]
The use of other currencies for transactions between Russian residents is punishable, with a few exceptions, with a fine of 75% to 100% of the value of the transaction.[61]
International trade
[edit]
On 23 November 2010, at a meeting of Russian Prime Minister Vladimir Putin and Chinese Premier Wen Jiabao, it was announced that Russia and China had decided to use their own national currencies for bilateral trade, instead of the US dollar. The move is aimed to further improve relations between Beijing and Moscow and to protect their domestic economies during the Great Recession. The trading of the Chinese yuan against the ruble has started in the Chinese interbank market, while the yuan's trading against the ruble was set to start on the Russian foreign exchange market in December 2010.[62][better source needed]
In January 2014, President Putin said there should be a sound balance on the ruble exchange rate; that the Central Bank only regulated the national currency exchange rate when it went beyond the upper or lower limits of the floating exchange rate; and that the freer the Russian national currency is, the better it is, adding that this would make the economy react more effectively and timely to processes taking place in it.[63]
Exchange rates
[edit]
Current RUB exchange rates From Google Finance: AUD CAD CHF CNY EUR GBP HKD JPY USD From Yahoo! Finance: AUD CAD CHF CNY EUR GBP HKD JPY USD From XE.com: AUD CAD CHF CNY EUR GBP HKD JPY USD From OANDA: AUD CAD CHF CNY EUR GBP HKD JPY USD
The first Russian ruble (RUR) introduced in January 1992 depreciated significantly versus the US dollar from US$1 = 125 RUR to around US$1 = 6,000 RUR (or 6 RUB) when it was redenominated in January 1998. The new ruble then depreciated rapidly in its first year to US$1 = 20 RUB before stabilizing at around US$1 = 30 RUB from 2001 to 2013.
The financial crisis in Russia in 2014–2016 was the result of the collapse of the Russian ruble beginning in the second half of 2014.[64][65][66][67][68][69] A decline in confidence in the Russian economy caused investors to sell off their Russian assets, which led to a decline in the value of the Russian ruble and sparked fears of a Russian financial crisis. The lack of confidence in the Russian economy stemmed from at least two major sources. The first is the fall in the price of oil in 2014. Crude oil, a major export of Russia, declined in price by nearly 50% between its yearly high in June 2014 and 16 December 2014. The second was the result of international economic sanctions imposed on Russia following Russia's annexation of Crimea and the Russian military intervention in Ukraine.[64][70]
The crisis affected the Russian economy, both consumers and companies, and regional financial markets, as well as Putin's ambitions regarding the Eurasian Economic Union. The Russian stock market in particular experienced large declines, with a 30% drop in the RTS Index from the beginning of December through 16 December 2014. From July 2014 to February 2015 the ruble fell dramatically against the U.S. dollar. A 6.5 percentage point interest rate rise to 17 percent[71] failed to prevent the currency hitting record lows in a "perfect storm" of low oil prices, looming recession and international sanctions over the Russo-Ukrainian War.[72]
Russia faced steep economic sanctions due to the invasion of Ukraine in early 2022. In response to the military campaign, several countries imposed strict economic sanctions on the Russian economy.[d] This led to a 32 percent drop in the value of the ruble, which traded at an exchange rate of 120 rubles per dollar in March 2022.[10] On 23 March 2022, President Putin announced that Russia would only accept payments for Russian gas exports from “unfriendly countries” in rubles.[73] This, along with several other actions to control capital flow, coinciding with soaring commodity prices led to the ruble rallying to a record high in May 2022 that economists feel is unlikely to last.[74] However, the ruble continued to rally in June 2022, hitting its highest point (51 rubles to the dollar) for the past seven years at the end of the month.[75]
RUB per US$1998–2023 Year Lowest ↓ Highest ↑ Average Date Rate Date Rate Rate 1998 1 January 5.9600 29 December 20.9900 9.7945 1999 1 January 20.6500 29 December 27.0000 24.6489 2000 6 January 26.9000 23 February 28.8700 28.1287 2001 4 January 28.1600 18 December 30.3000 29.1753 2002 1 January 30.1372 7 December 31.8600 31.3608 2003 20 December 29.2450 9 January 31.8846 30.6719 2004 30 December 27.7487 1 January 29.4545 28.8080 2005 18 March 27.4611 6 December 28.9978 28.1910 2006 6 December 26.1840 12 January 28.4834 27.1355 2007 24 November 24.2649 13 January 26.5770 25.5808 2008 16 July 23.1255 31 December 29.3804 24.8529 2009 13 November 28.6701 19 February 36.4267 31.7403 2010 16 April 28.9310 8 June 31.7798 30.3679 2011 6 May 27.2625 5 October 32.6799 29.3823 2012 28 March 28.9468 5 June 34.0395 31.0661 2013 5 February 29.9251 5 September 33.4656 31.9063 2014 1 January 32.6587 18 December 67.7851 38.6025 2015 17 April 49.6749 31 December 72.8827 61.3400 2016 30 December 60.2730 22 January 83.5913 66.8336 2017 26 April 55.8453 4 August 60.7503 58.2982 2018 28 February 55.6717 12 September 69.9744 62.9502 2019 26 December 61.7164 15 January 67.1920 64.6184 2020 10 January 61.0548 18 March 80.8692 72.4388 2021 27 October 69.5526 8 April 77.7730 73.6628 2022 30 June 51.1580 11 March 120.3785 68.4869 2023 15 January 66.0026 8 October 101.0001 85.5086 Source: USD exchange rates in RUB, Bank of Russia[76]
Most traded currencies by value
Currency distribution of global foreign exchange market turnover[77] Rank Currency ISO 4217
code Symbol or
abbreviation Proportion of daily volume Change
(2019–2022) April 2019 April 2022 1 U.S. dollar USD US$ 88.3% 88.5% 0.2pp 2 Euro EUR € 32.3% 30.5% 1.8pp 3 Japanese yen JPY ¥ / 円 16.8% 16.7% 0.1pp 4 Sterling GBP £ 12.8% 12.9% 0.1pp 5 Renminbi CNY ¥ / 元 4.3% 7.0% 2.7pp 6 Australian dollar AUD A$ 6.8% 6.4% 0.4pp 7 Canadian dollar CAD C$ 5.0% 6.2% 1.2pp 8 Swiss franc CHF CHF 4.9% 5.2% 0.3pp 9 Hong Kong dollar HKD HK$ 3.5% 2.6% 0.9pp 10 Singapore dollar SGD S$ 1.8% 2.4% 0.6pp 11 Swedish krona SEK kr 2.0% 2.2% 0.2pp 12 South Korean won KRW ₩ / 원 2.0% 1.9% 0.1pp 13 Norwegian krone NOK kr 1.8% 1.7% 0.1pp 14 New Zealand dollar NZD NZ$ 2.1% 1.7% 0.4pp 15 Indian rupee INR ₹ 1.7% 1.6% 0.1pp 16 Mexican peso MXN MX$ 1.7% 1.5% 0.2pp 17 New Taiwan dollar TWD NT$ 0.9% 1.1% 0.2pp 18 South African rand ZAR R 1.1% 1.0% 0.1pp 19 Brazilian real BRL R$ 1.1% 0.9% 0.2pp 20 Danish krone DKK kr 0.6% 0.7% 0.1pp 21 Polish złoty PLN zł 0.6% 0.7% 0.1pp 22 Thai baht THB ฿ 0.5% 0.4% 0.1pp 23 Israeli new shekel ILS ₪ 0.3% 0.4% 0.1pp 24 Indonesian rupiah IDR Rp 0.4% 0.4% 25 Czech koruna CZK Kč 0.4% 0.4% 26 UAE dirham AED د.إ 0.2% 0.4% 0.2pp 27 Turkish lira TRY ₺ 1.1% 0.4% 0.7pp 28 Hungarian forint HUF Ft 0.4% 0.3% 0.1pp 29 Chilean peso CLP CLP$ 0.3% 0.3% 30 Saudi riyal SAR ﷼ 0.2% 0.2% 31 Philippine peso PHP ₱ 0.3% 0.2% 0.1pp 32 Malaysian ringgit MYR RM 0.2% 0.2% 33 Colombian peso COP COL$ 0.2% 0.2% 34 Russian ruble RUB ₽ 1.1% 0.2% 0.9pp 35 Romanian leu RON L 0.1% 0.1% 36 Peruvian sol PEN S/ 0.1% 0.1% 37 Bahraini dinar BHD .د.ب 0.0% 0.0% 38 Bulgarian lev BGN BGN 0.0% 0.0% 39 Argentine peso ARS ARG$ 0.1% 0.0% 0.1pp … Other 1.8% 2.3% 0.5pp Total[e] 200.0% 200.0%
See also
[edit]
Belarusian ruble
Transnistrian ruble
Ruble (disambiguation), various historic and modern rubles.
Notes
[edit]
References
[edit]
Citations
[edit]
Sources
[edit] | ||||||
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1 RUB to USD stats
The performance of RUB to USD in the last 30 days saw a 30 day high of 0.0118 and a 30 day low of 0.0110. This means the 30 day average was 0.0115. The change for RUB to USD was -2.04.
The performance of RUB to USD in the last 90 days saw a 90 day high of 0.0120 and a 90 day low of 0.0109. This means the 90 day average was 0.0114. The change for RUB to USD was 0.49.
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9245 | dbpedia | 0 | 8 | https://academic.oup.com/book/46112/chapter/404653722 | en | [] | [] | [] | [
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9245 | dbpedia | 2 | 82 | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10072797/ | en | Dedollarization as a Direction of Russia’s Financial Policy in Current Conditions | [
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"Xu Wenhong"
] | 2023-08-20T00:00:00 | Under financial sanctions imposed on it by the US and the EU, Russia accelerated dedollarization of the economy in order to protect its sovereignty in strategic rivalry with the US. To this end, a set of strategies has been developed, such as reducing ... | en | https://www.ncbi.nlm.nih.gov/coreutils/nwds/img/favicons/favicon.ico | PubMed Central (PMC) | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10072797/ | Since the beginning of the Ukrainian crisis, Western countries led by the United States have successively imposed 10 128 sanctions against Russia in various areas.1 For its part, Russia has taken certain antisanctions measures, among which “dedollarization” is of a fundamental character [1]. In the global trend of dedollarization, Russia’s actions are the most radical with a significant demonstration effect. On April 15, 2021, US President Biden signed a decree on the start of a new round of sanctions against Russia, prohibiting US financial institutions from participation in the primary market for ruble or euro-denominated bonds issued after June 14, 2021.
Russia reacted quickly by announcing that the US dollar would no longer be accepted into the currency basket of the Russian National Welfare Fund since May 20.2 On June 3, 2021, at the St. Petersburg International Economic Forum, the Russian Ministry of Finance announced that it would adjust the asset structure of the Russian National Welfare Fund within a month to reduce the share of dollar assets to zero. On July 5, the Ministry of Finance reported that the task was completed, and dollar assets were completely removed.3 At the same time, Russia almost sold off long-term US Treasury bonds, which shows that with the deepening of the US–Russian sanctions confrontation, the dedollarization of the country enters a new stage.
Motivation for Russia’s dedollarization.
Protection of the state’s monetary sovereignty. The issue and circulation of local currency are the basis of monetary sovereignty. When a country’s basic goods and services are traded in foreign currency rather than in local currency, the country’s monetary sovereignty is violated. In the dollarized Russian economy, this violation undermines Russia’s independence in conducting its monetary policy. This is so because foreign currency does not always meet local payment needs, its use leads to fluctuations in the exchange rate of the ruble due to the rapid inflow of hot money, puts the economy under the influence of the monetary policy of the US Federal Reserve, increases inflation as a result of volatile exchange rates, forces the Russian government to hold more foreign exchange reserves to cope with financial risks, etc. In such circumstances, dedollarization is a natural choice for a state to protect its monetary sovereignty.
Strategic rivalry with the US. The Soviet Union and the United States had been rivals in global geostrategic competition. Then Russia’s position somewhat weakened. However, under Putin’s leadership, Russia has regained not only its political stability but also its commitment to the mission of continuing its strategic rivalry with the United States. The United States uses the dollar, the international currency, as a decisive argument for imposing sanctions on other countries. Thus, the hegemony of the US dollar serves as an economic basis for claiming hegemony around the world, for influencing regional or international affairs. After Russia’s launching the special operation in Ukraine, the US and the EU imposed sanctions against Russia. Therefore, dedollarization is only a natural continuation of the Russian–American strategic rivalry in the financial sector and the international monetary system.
Competition for power in oil pricing. Russia is a major energy exporter and the Russian economy is a typical energy economy that depends on exports. Since 1973, international crude oil prices have been pegged to the US dollar, making it the currency for international energy settlements. This negatively affected Russia because despite owing oil it was unable to manage its pricing. For this reason, Russia has established the Russian Oil Trading Platform4 and the St. Petersburg International Commodity Exchange in order to value exported crude oil in rubles. Russia also withdrew REBCO from the New York Mercantile Exchange and conducted trading on the St. Petersburg Commodity Exchange, owing to which it gained the ability to set prices for domestic petroleum products. This platform is fully supported by Russia, and 1/4 of the total volume of oil products purchased by the state is traded here. Gazprom, with its state-controlled shares, guarantees the supply of oil to large buyers such as the Russian Ministry of Defense, the Ministry of Emergency Situations, and the Ministry of Agriculture, which is crucial for the stability of Russia’s macroeconomics. In order to keep the price policy of oil exports entirely in its hands, the Russian government utterly refuses to allow US companies to join the platform. For the same purpose, Gazprom created the largest gas exchange in Europe in St. Petersburg. In order to ensure national economic security and maximize the interests of Russia’s main export, Russia needs to compete for the price of oil, which, however, is pegged to the dollar.
Combating international sanctions. At the end of 2013, the Ukrainian crisis erupted, after which, at the suggestion of the United States, Western countries began to impose sanctions against Russia. The sanctions include the following aspects:
– Inclusion of Russians in special sanctions lists. More than 400 people and over 500 legal entities in Russia have been included in the US Treasury Department’s Office of Foreign Assets Control (OFAC) sanctions list. In November 2014, the US State Department announced sanctions that included a ban on Russian state-owned banks from using US dollars for settlements, which led to the stagnation of Russian international business activity [2]. A typical case was the measures against the aluminum company RUSAL.5
— Threat of Russia’s disconnection from the SWIFT system. The US, UK, and other countries have repeatedly threatened to cut Russia’s connection to the SWIFT system. A policy report6 released by the Republican Research Committee of the US House of Representatives in June 2020 notes that the United States cannot control SWIFT but it can impose sanctions until Russia is completely excluded from the system.7
— A ban on the purchase of Russian bonds by the US and EU. Around 2006, the Russian government paid off its foreign debts. In recent years, most of Russia’s external debt has been corporate debt. In order to impose sanctions on Russia, the US and EU prohibit domestic or related foreign financial institutions from buying ruble and nonruble bonds issued by the Russian Central Bank, the Ministry of Finance and the National Welfare Fund in the primary market.8 The US and EU sanctions cut off the channels of financing for Russia and limited the economic exchanges of Russian enterprises with European and American ones. At the same time, foreign financial institutions refuse to do business with Russian companies included in the sanctions list, fearing that they will also fall under sanctions. This resembles a “financial nuclear attack” on Russian enterprises, as it is now very difficult for them to get Western loans. Even if a foreign loan is finally granted, the conditions will be tough and the interest rate will be very high. At the same time, Russia’s huge foreign exchange reserves were either invested in US Treasury bonds and securities, or deposited in Western banks, where, in fact, they functioned as low-interest loans offered to the United States. Russian enterprises then received loans from the West at the market interest rate. According to experts, Russia’s annual losses in foreign exchange reserves alone amounted to at least 25 billion US dollars.
— Extension of the US “long-arm statute.” According to the principle of “minimum contacts,” transactions carried out in dollars or through American banks automatically come under the jurisdiction of the United States. Thus, Russia falls under possible sanctions from America as soon as it sells energy or any other product in US dollars to other countries.
— Impact on the Russian stock market. Financial sanctions against Russia by the US and the EU have a huge impact on the Russian capital market, which is small in scale and vulnerable in structure. More than half of the investors in the Russian stock market were from Western countries [3]. Therefore, the US and EU financial institutions had the opportunity to put pressure on the ruble in order to depreciate it, only in 2018 the ruble rate fell by more than 30% [4].
— The possibility of freezing assets. Due to the United States’ unilateral policy, economic sanctions, and the use of the dollar as a factor in pressure on counterparties, the assets of many countries were frozen.9 More and more countries that have fallen under sanctions are forced to take the path of dedollarization, and among them Russia is the largest.10
The impact of the US dollar is declining due to economic problems in the US itself. In recent years, the US dollar has gradually become a high-risk asset, and this is also an important reason for Russia’s dedollarization policy.
Concerns about the medium- and long-term development of the US economy. The US economy has hit a rough patch in recent years and lacks growth potential. Due to the impact of the COVID-19 epidemic, it has shown signs of recession or even stagflation. The impact of American shale oil and alternative energy sources on the petrodollar system deepened. The total factor productivity of the United States is declining. The pretax profit of enterprises in the US registers zero growth. All these and many other factors make people pessimistic about the medium and long-term development of the US economy.
Concerns about growing US debt. Before the epidemic, the debt of the US federal government reached 23.3 trillion US dollars, and by July 2021, it exceeded 28.5 trillion, while GDP in 2020 amounted to only 20.6 trillion US dollars, and public debt amounted to 128% of GDP. The annual growth rate of US GDP was only about 3%, well below the growth rate of debt. Given the current rate of debt growth, the US government will increase its debt by at least ten trillion US dollars over the next ten years. The US Financial Supervisory Authority has warned that in 2028 US debt repayments will reach 1.05 trillion US dollars and they can only be repaid if GDP growth exceeds 7%. The US Treasury has announced plans to issue 20-year Treasury bonds or even 50-year11 or 100-year treasury bonds.12 The US Federal Reserve’s ability to buy bonds cannot keep pace with future debt growth, and the imbalance between US bonds and US Federal Reserve bond purchases would be catastrophic. In the future, the United States will not even be able to pay the yield on US bonds, let alone the principal.
Treasury bonds are only part of the US debt, corporate debt in the country also reached a record level. Together with household debt in the first quarter of 2020, America’s total debt reached 55.9 trillion US dollars and amounted to about 260% of GDP.13 There is a danger that the potential risks of nonpayment on US Treasury bonds will provoke a new round of the financial crisis.
Concerns about US debt losing its role as a safe haven. Countries around the world, in order to maintain and increase the value of their dollar reserves, are converting US dollars into US debt to earn meager interest income. Therefore, the large amount of US debt, together with the subsequent interest income, attracts investors from all over the world. However, in recent years, the role of US debt as a safe haven has been steadily weakening. In the first half of 2021, the US debt rate generally declined. The US debt issued by the US Treasury is likely to be useless. Many US debt holders are disposing of it. US Treasury International Capital (TIC) report shows that as of the end of April 2021, US debt held by foreign holders was 7.07 trillion US dollars, almost 50 billion US dollars less than at the beginning of the year.
Concerns about oversupply of US dollars. The US Federal Reserve announced launching an unlimited policy of quantitative easing by expanding the money supply in order to redistribute social wealth and achieve economic recovery and social stability. The US economy is increasingly dependent on financial stimulus provided by quantitative easing policies. In the 21st century, the overissuance of the US dollar has led to three major “defaults” around the world. After the 9/11 incident in 2001, the United States launched military operations in the Middle East and at the same time began to cut interest and print money. During the 2008 financial crisis, the US Federal Reserve launched three rounds of QE (quantitative easing policy). US Federal Reserve liabilities expanded from over 900 billion US dollars to 4.5 trillion US dollars. After the outbreak of the COVID-19 epidemic in 2020, on March 16, the US Federal Reserve reduced the interest rate to zero and launched a massive quantitative easing program for 700 billion US dollars. On March 23, the Fed began buying US Treasuries and mortgages to support the stock market. The US Federal Reserve printed an additional 2.5 trillion US dollars (obligations on the balance sheet expanded from 4.1 trillion US dollars to more than 6.7 trillion US dollars). The United States has invested more dollars than all reserves combined in history. Repeated defaults and excessive dollar issuance marked a historic change in confidence in the US and the US dollar.
Concerns about long-term depreciation of the US dollar. The global dollar supply is constantly declining, which is accompanied by a long-term depreciation of the US currency. In the medium and long term, the dollar will continue to decline, and its share as a reserve currency in the international monetary system will decrease. Whenever there is a crisis, the US dollar depreciates sharply to stimulate exports, employment, and a quick economic recovery when other countries are still trapped in difficulties. The US dollar, as an international reserve and safe-haven currency, is strengthening due to rising demand, making the whole world pay for the financial crisis. In fact, as long as the American currency is issued in huge quantities, the international financial crisis will occur periodically. The currencies of developing countries are mainly pegged to the US dollar and they tend to depreciate in line with its growth. The cycle of rising and falling of the dollar, in essence, leads to an imbalance in the international economy, which will trigger the next round of the financial crisis.
Concerns about the dollar-oriented international financial system. The shortcomings of the dollar-based international financial system have caused a cyclical imbalance in the world economy and frequent financial crises. In a dollar-dominated system, the US can issue money without the obligation to maintain its stable exchange rate. There are too many derivatives in developed US finance, including more than 300 trillion of various borrowed financial assets. Bubbles in GDP have been growing there steadily for more than a decade. This, together with industrial depletion, excessive credit consumption, and zero savings, makes the country increasingly vulnerable to the financial crisis. Once the US debt crisis breaks out, it will definitely affect the whole world. In addition, the US threatens to impose sanctions at every turn, directly or indirectly affecting the economies of other countries, causing economic instability, which in turn will lead to regional and even global financial collapses. Since achieving independence, Russia has experienced many financial upheavals and it is therefore in dire need of financial and economic stability.
Diversification of the international financial system. The status of the US dollar as an international currency is based on its being pegged to oil. At present, this international monetary system has reached a point where it must be changed. On the one hand, the international community is increasingly dissatisfied with the petrodollar-pegged system. There are many problems in the international financial system centered on the US dollar, as the exchange rates of major currencies experience sharp ups and downs with increased foreign exchange risk. As a result, commodity prices fluctuate wildly around the world hindering normal international trade and investment. On the other hand, in recent years, the rapid development of new energy around the world has affected the petrodollar system, and the speedy progress of the shale oil industry in the United States has turned America from an ally into a competitor of Saudi Arabia and other energy exporting countries. The international financial system based on petrodollars was shaken. Economies around the world are actively looking for a way to break away from the hegemony of the dollar, hence the emergence of the Eurozone, the rapid development of the Asian Infrastructure Investment Bank (AIIB) and the creation of the BRICS Bank, etc. All these facts show that countries dedollarize in their own way. Dedollarization is no longer a fragmented choice of a few countries; instead, it is becoming a global trend. Russia, as a huge country with great global influence, has taken many measures in this direction, reflecting the general needs and future trends around the world.
Russia’s strategy for dedollarization.
With its long history of major power competition, Russia understands that dedollarization will be a long-term process. It includes the following measures:
Use the situation to turn the crisis into an opportunity for development. After the collapse of the Soviet Union, the Russian economy was heavily dependent on dollars. After the events in Ukraine in 2014, Western countries led by the United States introduced several stages of sanctions against Russia in the field of energy, finance, and national defense, which had an impact on the Russian economy. While in 2013 the volume of trade between Russia and Europe amounted to about 410 billion US dollars, by 2020 it has decreased to 219 billion US dollars. Under US and EU sanctions, Russia was forced to retaliate in the financial sector. In particular, its own payment system (MIR) and financial information exchange system (SPFS) were created, which became the basis of Russia’s financial infrastructure for dedollarization.
Influence public opinion. As President of Russia, Putin repeatedly expressed his position on dedollarization. At a meeting held in Astana in March 2015, the Heads of States of Russia, Belarus, and Kazakhstan discussed the creation of a monetary union aimed at getting out of dollar control. Putin emphasized the importance of dedollarization in terms of protecting Russia’s national sovereignty and that the use of the US dollar as a “weapon” for sanctions undermined its status.14
Sergei Glazyev was an economic adviser to President Putin and one of Russia’s spokespersons for dedollarization. He called for reducing dependence on US dollars in domestic economic, as well as in investment and trade activities within the Eurasian Economic Union, the Shanghai Cooperation Organization and the BRICS framework, the sale of government debt of NATO countries, reducing the purchase of government bonds from countries participating in sanctions against Russia, and reducing dollar settlements and limiting foreign exchange reserves of commercial banks to prevent speculation and capital flight.
Elvira Nabiullina has been Governor of the Central Bank of Russia for many years. Back in 2016, she made dedollarization one of the permanent missions of the Russian Central Bank.15 Over the years, on several occasions16 she has offered concrete ideas and proposals on this direction of financial activity. Russian Finance Minister Anton Siluanov had formulated specific measures: to combine dedollarization and tax incentives in 2018.17 Dmitry Peskov, Press Secretary of the President of Russia, Maxim Oreshkin, former Minister of Economic Development (currently Assistant to the President of the Russian Federation), Andrey Kostin, President of the Russian Foreign Trade Bank (VTB), and Vyacheslav Volodin, Chairman of the Russian Duma repeatedly spoke on this topic. Since June, we have observed withdrawal of dollars from the Russian National Welfare Fund.
At the St. Petersburg Economic Forum 2021, dedollarization was heatedly debated once again. In Russian government circles, a complete consensus has been reached on this issue.
Formulate a strategic plan. In April 2018, the RF Ministry of Economic Development, Ministry of Finance, and the Central Bank of Russia jointly formulated a dedollarization plan, which included18 such measures as granting preferential treatment for exports calculated in rubles, accelerating the recovery of value added tax for exports, and gradual abolition of mandatory repatriation of export earnings (in rubles). The plan also emphasized that dedollarization at that time did not mean an immediate and complete rejection of the use of US dollars, and this would not affect the foreign currency accounts of Russian depositors in any way. Russia is reducing its dependence on US dollars in a well-planned and dynamic way.19
Speed up dedollarization, explaining why it is necessary. With the development of negative dynamics in Russian-American relations, the dedollarization measures for Russia are gradually being accelerated and modernized. The use of the US dollar in settlements decreased from 61.5% in the first quarter of 2020 to 48.3% in the first quarter of 2021. On June 3, 2021, the Russian government held an economic forum in St. Petersburg where it announced that the US currency would be completely withdrawn from the National Welfare Fund by July 5, 2021. At the same time, in domestic and foreign media, Russian public officials have repeatedly emphasized that the country’s dedollarization is forced due to US and EU sanctions, thereby appealing to the opinion of the international community and actively expanding the circle of its allies.
Highly appreciate and develop international cooperation. Russia is a large country with serious international influence and rich experience in international competition. It values strengthening cooperation with China, India, Turkey, Iran, as well as is making maximum use of the Eurasian Economic Union, SCO, BRICS, and other international organizations in order to develop relations with their member countries.
Measures and consequences of dedollarization in Russia
As tensions between the Russian Federation and the United States grew, the dedollarization policy in Russia was gaining momentum. After the global financial crisis in 2008, Russia took the initiative by proposing to peg the ruble to gold instead of the US dollar.20 After the introduction of anti-Russian sanctions by the US and Europe in 2014, Russia has already officially started dedollarization. In 2016, this process accelerated, and in 2018, it became large-scale. After the US announced a new round of sanctions, dedollarization is once again becoming a hot topic. Against this background, Russia has taken a number of specific measures.
Direct reduction in the use of dollars. Strengthening restrictions on the circulation of US dollars in the RF, control of consumer protection in Russia,21and a ban on payments in foreign currency. It is mandatory for all sales outlets to install a POS machine to support cashless payments in rubles, reject foreign currency payments in the domestic economic system, strengthen foreign exchange regulation, standardize conversion between US dollars and rubles, and combat black market transactions in currencies.
Higher requirements for the banking industry. When Russia became independent, there were more than 2400 domestic banks, and by 2020, this number dropped to almost 400. The main purpose of this reduction was to reduce leverage. Oversight of US dollar deposits has also been strengthened. Commercial banks were required to have different reserves for deposits in national and foreign currencies. In addition, the interest rate on US dollar deposits was virtually reduced to zero; additional conditions were added for issuing loans in foreign currency, the reserve required for loans in local currency was reduced, and mortgages in dollars were banned.
Since 2013, the Central Bank of Russia has been taking measures to reduce the share of US dollars in money transfers both within Russia and abroad. As of September 2018, the share of foreign currency deposits of individuals and legal entities in Russian banks decreased from a peak of 37% in 2016 to 26%.
Reducing the use of US dollars in international settlements. The RF Ministry of Economic Development has developed a plan for dedollarization in foreign trade. The role of US dollars in Russian foreign trade settlements is gradually decreasing. Only in the first half of 2019, the share of dollar settlements shrank from 54.8% in 2018 to 51.2%.
Russia, as a major international energy exporter, has announced that from 2019, it will refuse to accept payments in US dollars for crude oil and natural gas transactions, and importers must pay in euros or other currencies. At the end of 2019, the share of euro in Russian trade settlements increased to 42.3%, which is almost equivalent to the share of US dollars (46.6%).22
In foreign trade, the dollar was replaced by the euro, yuan, ruble, and other currencies. Over the five years from 2013 to 2018, the share of the euro in Russia’s exports to the EU countries almost doubled from 18.1 to 34.3%.23 In 2018–2019 alone, the participation of the euro in Russian–European trade increased from 32 to 42%. Over the same period, US dollar settlements in Chinese–Russian trade decreased from 50 to 45.7%, while euro settlements increased from 0.7 to 37.6%.24
Russia’s settlement currency has moved from US dollars to rubles or other foreign currencies in trade with the CIS, EAEU, SCO, and BRICS countries. In October 2019, the share of settlements in the national currency within the framework of the Eurasian Economic Union was 76.6%, of which 72% was in rubles.25 According to the plan of the RF Ministry of Economic Development, the volume of trade in Russian goods and services in rubles in 2024 will reach 300 billion US dollars, and the rate of settlements in the national currency with the countries of the Eurasian Economic Union will be increased to 90%. In 2020, 62% of trade with CIS countries was conducted in rubles.
Owing to the above measures, Russia was able better to avoid the use of US dollars in international economic activity and it has made a significant shift from US dollars to euros in international settlements in order to expand the space for international trade and economic exchanges. In the new era, within the framework of Sino–Russian strategic cooperation, Russia uses the yuan as an international settlement currency to withstand the pressure of US–European sanctions, uses the Japanese yen in some settlements to strengthen Russian-Japanese economic and trade relations, and holds gold assets in order to maintain international reserves.
Decrease in the share of the US dollar in foreign exchange reserves. Until March 2018, the share of the US dollar in the foreign exchange reserves of the Central Bank was 43% ~ 48%. With the tightening of anti-Russian sanctions, the Central Bank of Russia began gradually to reduce it in favor of other currencies and gold. On April 26, 2021, Russia approved the purchase of Chinese government bonds denominated in yuan by the National Welfare Fund and included the yuan in the list of investable currencies for the Fund. Prior to this, the list of investable foreign currencies for the Fund included only seven positions i.e. US dollars, euros, pounds, Australian dollars, Canadian dollars, Swiss francs, and Japanese yen. The assets of the National Welfare Fund of Russia account for approximately 7% of Russia’s gross domestic product (GDP). Prior to the addition of Chinese government bonds to the list, the Russian National Welfare Fund was only allowed to invest in government bonds from 17 countries, including the US, Australia, Germany, Japan, Switzerland and Canada. Thus, the Chinese security became the 18th investment government bond. According to the Central Bank of the Russian Federation, the share of the yuan in Russia’s foreign exchange reserves increased from 2.8 to 14.4% by the end of 2018; the share of currency and US dollar assets in Russia’s international reserves decreased to 21.2% by the end of 2020, while the ratio of gold and yuan increased to 23.3 and 12.8%, respectively. At present, the Russian Central Bank is probably the largest investor in Chinese government bonds available to foreigners, with nearly a third of its total holdings denominated in yuan.
Russia’s sale of US Treasuries. In October 2010, US debt held by Russia hit a record high of 176.3 billion US dollars, making Russia one of the top ten investors in America’s Treasury bonds. After the outbreak of the Ukrainian crisis, Russia began to accelerate bond sales. In the 18 months since 2017, Russia has reduced its holdings of US Treasury bonds from 96 billion US dollars to 8 billion, a 90% drop.26 According to the US Treasury, in February 2021 Russia almost completely abandoned long-term US Treasury bonds (only 306 million US dollars remained). Russia sold 94% of the peak amount of US bonds it used to hold.27
Expanding non-US dollar funding channels. Under the sanctions, it is difficult for Russian businesses to obtain funding or trade in US dollars. In order actively to expand financing channels, Russia has been preparing to issue sovereign bonds in yuan since 2014 and has formulated the relevant regulations. Russian banks and energy companies have started looking for financing in international financial centers such as Hong Kong, Singapore, and Shanghai.
Increase in gold and foreign exchange reserves. While significantly reducing its holdings of US debt, Russia has steadily increased its holdings of gold.28 Since 2000, Russia’s gold reserves have increased five times, and in five years, starting from 2014, they have doubled. As of July 2022, Russia’s gold reserves are 2298.53 tons.29 Since the second half of 2019, Russia has slowed down the accumulation of gold reserves. On the one hand, its foreign exchange reserves were gradually restructured to a reasonable level. On the other hand, Russia, as an oil exporter, may face liquidity pressure due to falling world fuel prices, and will not further increase its gold reserves. Nevertheless, Russia purchased 158.1 tons of gold in 2019 and 8.1 tons in January 2020. On April 1, 2020, the Russian Central Bank announced that it would suspend the purchase of gold on the domestic precious metals market, and in the future, its policy in this regard will be determined in accordance with the conditions of the international market.
At the same time, gold production in Russia is also significantly increasing. According to the Russian Federation of Gold Miners, Russian domestic producers have mined 2189 tons of gold over the past decade. Russia currently ranks third in the world in terms of gold production after China and Australia, and gold miners plan to double their output, making Russia the second largest gold producer in the world.
In addition, unlike other countries in the world that store their gold in the United States, all Russian gold is stored in the vaults of the Central Bank of Russia in Moscow.30
Currency swaps31and local currency transactions. In recent years, the international currency swap has become a new monetary mechanism. Russia is seeking to sign various currency swap agreements with countries such as Iran, Turkey, China, etc. This will allow it to trade with other countries in local currency instead of US dollars.
Based on the currency swap, Russia is also actively promoting bilateral settlements and payments in local currency. In October 2019, the Russian Ministry of Finance announced that it had signed an agreement with the Turkish Ministry of Finance on settlements and payments in national currency. India and Russia have started cooperation in this area. Iran and Russia have signed bilateral currency agreements. Energy trade between Russia and Iran must be conducted in local currency. Russia is also committed to promoting local currency settlements in bilateral trade with countries in the Middle East, Southeast Asia, Latin America, and Africa.
Creation of an internal payment system and a system of financial information exchange.32Setting up an internal FIX (financial information exchange) system. In December 2014, the Bank of Russia started developing the SPFS (FMS) (Financial Messaging Systems), which was regarded as the Russian version of SWIFT. Its design relies on the SWIFT system, adopting the same standard and interoperability capable of supporting transaction messages for many currencies. Currently, the main users of the system in Russia are the Russian Treasury and large banks.
Creation of a proprietary payment system. On December 15, 2015, the Bank of Russia began issuing the first batch of bankcards supporting its domestic payment system, namely MIR cards. In the second half of 2017, the Russian government legislated that new cards issued by banks after July 1, 2017, were to support the MIR payment system. In July 2020, the State Duma of the Russian Federation additionally adopted an amendment to the Consumer Rights Protection Law proposed by the Russian federal government, according to which online merchants in Russia were required to accept payments with the MIR card from November 1, 2020.
Strengthening international cooperation in the field of the international payment system. Russia not only seeks to improve the use of the SPFS system by domestic financial institutions, but also is eager to cooperate with well-known international financial institutions in the field of payment systems. Russia is currently negotiating with regulators in China, Iran, and Turkey for linking SPFS with financial information systems in those countries. Russia is constantly improving the system in accordance with international standards in order to promote its use by foreign enterprises. In June 2019, during the SCO summit, Putin put forward an initiative to create conditions for settlements in the national currency and strengthen cooperation between the SPFS and Chinese and Mongolian financial institutions. India expressed its intention to strengthen cooperation with SPFS. On September 17, 2019, the Central Bank of Iran confirmed that Iran and Russia were to create a bank settlement mechanism between the two countries in order to “bypass” the SWIFT system and avoid US and European sanctions.
MIR cards can be used for payments throughout Armenia, Abkhazia and in many parts of Belarus, Kazakhstan, Kyrgyzstan, Uzbekistan, and Turkey. The Bank of Russia has strengthened cooperation with the Chinese cross-border international payment system (CIPS) in yuan, jointly issuing MIR-Union Pay cards.
In addition, Russia, China, and India are exploring electronic payment methods in case they are cut off from the SWIFT system. The Eurasian Economic Union also hopes to develop a new payment system without US dollars and it has signed specific trade agreements with partners, including China and Iran, to avoid using the US currency through investment and settlement mechanisms.
New payment methods. BRICS Pay system. Currently, all BRICS countries, except for South Africa, have created their own independent payment systems, namely the Russian MIR system, the Chinese UnionPay, the Indian RuPay and the Brazilian ELO. At the meeting of the BRICS Business Council33 held at the end of February 2019, the Russian side put forward a proposal to build a payment system that would be aimed at integrating the internal payment systems of the BRICS countries to facilitate financial payments and transfers, effectively simplify cross-border payments, and reduce the impact of the US dollar on the international trade. On November 14, 2019, the BRICS countries signed the relevant documents on the creation of a payment system.
Russia’s digital currency. Electronic payments are already widely used in Russia. In 2018, the Russian parliament began drafting a bill on digital financial assets, which clarified the legal concept of digital currency, strengthened its public acceptance, and analyzed the scheme for improving the tax system. In October 2020, the Central Bank of Russia released a report analyzing the feasibility of issuing digital rubles and describing various development modes and scenarios. Deputy Chairman of the Central Bank of the Russian Federation Alexei Zabotkin noted that there was a demand for digital rubles, which would be used in addition to cash and noncash rubles. He stressed that the Central Bank would introduce digital currency into the internal settlement system34 and it would become a new factor for the dedollarization of Russia.
Establishment of a stabilization fund. One of the most important fiscal measures was the adoption of Alexey Kudrin’s proposal and the establishment of a stabilization fund.35 During Kudrin’s tenure as finance minister, international crude oil prices rose. After the increase in the export tax on crude oil, a stabilization fund was created that helped Russia not only to survive the financial crisis of 2008, but also to overcome subsequent crises. The reduction of the dollar share therein in July 2021 also contributed to the dedollarization.
Deoffshoring. After the collapse of the Soviet Union, the Russian economy experienced privatization and dollarization, which led to a large outflow of capital. In December 2014, in order to reduce capital flight abroad, V. V. Putin in his annual address to the nation called for a series of deoffshorization measures, including the return of Russian businesses back to domestic jurisdiction, the repatriation of foreign Russian funds, the establishment of the Russian Precious Metals Exchange, and the creation of two domestic offshore financial centers in Russia (Primorye and Kaliningrad). Responding to the president’s call, billionaires, for example, Gennady Timchenko, returned their assets to Russia [5].
Promoting dedollarization in regional international organizations or countries. Taking into account current economic opportunities, Russia was actively strengthening cooperation with other countries and was beginning to promote dedollarization in some regional organizations.
1. Russia plays a leading role in dedollarization within the Eurasian Economic Union and the CIS. Owing to Russia’s efforts, 70% of Russian exports and 30% of Russian imports to the Eurasian Economic Union are paid in Russian rubles. Russia is actively advocating the payments in the trade between the CIS countries being made in Russian rubles.
2. Russia actively promotes dedollarization in the SCO and supports such countries as India in this effort.
3. Russia proposes to build a new payment system called “BRICS Payment” among the BRICS countries. The establishment of the BRICS Development Bank and the emergency standby agreement at the BRICS summit held in July 2015 means that future loans and emergency assistance between the BRICS countries will be issued in US dollars to a lesser extent.
4. Getting rid of the petrodollar peg. The tie between oil and the dollar is the key to the hegemony of the US currency. Previously, the US was the largest importer of crude oil. After the deployment of shale oil production, the United States became the world’s largest exporter of it, becoming a competitor to Saudi Arabia and Russia. Russia is using its rich oil resources as a powerful argument in order to lead the fight against the petrodollar. On March 6, 2020, as COVID-19 raged around the world, international demand for crude oil plummeted.
Russia rejected Saudi Arabia’s proposal to cut oil production, causing international crude oil prices to plummet to shockingly negative levels. This reduced the export of the US dollar, and the factors supporting the status of the US dollar changed.
Prospects and significance of dedollarization in Russia .
The international discussion about the possible collapse of the US dollar has been going on for almost 50 years. It has become increasingly violent in recent years, but the dominance of the dollar still lingers. According to SWIFT data, in 2012, 29.7% of global transactions were conducted in US dollars, and this share increased to 39.1% at the beginning of 2019. According to the statistics of the International Monetary Fund, the share of US dollars in world foreign exchange reserves was 59% in 1995 and increased to 63% in 2018. There is still a persisting gap in the economic performance of countries: Russia’s GDP in 2019 amounted to 1.64 trillion US dollars while the United States’ GDP was 20.5 trillion. What are the prospects and significance of Russia’s dedollarization under such conditions?
The prospect of dedollarization in Russia. Russia and other countries are taking countermeasures because the United States is using the dollar as its main tool in imposing sanctions. As America expands the package of sanctions, more and more countries are starting to participate in joint dedollarization. Currently, about 10% of countries and 1/4 of the world’s population suffer from US sanctions, hence the global trend of dedollarization.36
After the global financial crisis of 2008, as well as in the context of the COVID-19 epidemic in 2022, the United States began to resort to quantitative easing in its monetary policy. This led to a loss of confidence in dollar bonds and undermined the dollar influence in the global economic system. Russia and other countries have begun to increase the share of the euro and other currencies in their reserves, which may further lead to a multipolar international monetary model. Just as the value of the British pound gradually lowered with the decline of the British Empire, the era of the dollar as a world currency will eventually end.
In the process of dedollarization, it is difficult for countries to take concerted action, since their interests do not always coincide. The US attempts to maintain dollar hegemony and simultaneous dedollarization of such countries as Russia entail deep political and economic uncertainty.
There will be many alternatives to the international payment system. Over time, it will include coexisting SWIFT, and systems in China, Russia and other states. The interconnection between payment systems in the European Union, China, and Russia will be the focus of economic and financial work in all countries in the future.
The Russian ruble cannot replace the US dollar as an international currency within a short space of time. Russia still lags behind the United States and developed European countries in terms of the efficiency in the distribution of market resources, which is a direct reflection of financial stability, the capital market, the size of the economy, infrastructure, and the abundance of financial products. Russia still has a long way to go. The lag in these areas will be an important factor influencing its dedollarization.
In addition, gold and digital currency will also become important tools in this process. Gold is seen as an important component of dedollarization in many countries. In recent years, Russia and other states have created significant gold reserves as a stepping-stone for the future.
The digital currency also sets the direction for future development. Digital currency issued by central banks (CBDC) will facilitate dedollarization. At present, Russia has made positive achievements in this area; in 2021, the Russian Law on Digital Financial Assets came into force and in the second half of 2021, legislative work was carried out on the digital ruble.
Significance of Russia’s dedollarization. Among the countries resorting to dedollarization, Russia is taking the most radical steps. It not only carries out dedollarization within the country but also promotes tough measures for the exchange of financial information and international currency payments for energy. Due to Russia’s decisive actions and its vigorous efforts in the field of international cooperation, more and more countries are joining the process of fighting the hegemony of the US dollar.
The main reasons for dedollarization are dissatisfaction with the hegemony of the US dollar, concern about its excess issue, the desire to change the Bretton Woods system and the urgent need to form a new international economic and financial order. Although dedollarization cannot completely eliminate the impact of the US currency on the Russian economy in a short time, it has a wonderful demonstration effect for the whole world and is of great historical significance for the destruction of the old dollar-dominated international monetary system and the creation of a new one. | ||||
9245 | dbpedia | 1 | 14 | https://www.elibrary.imf.org/view/journals/024/1960/001/article-A004-en.xml | en | Russian Gold and the Ruble | [
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"Oscar L. Altaian"
] | 1960-01-01T00:00:00 | THERE HAS BEEN an increasing amount of comment in the world press about the possibility that the U.S.S.R. may introduce a gold ruble, and widespread speculation about the effects of such an action. The anticipated effects upon the noncommunist world have, on the whole, been described in gloomy terms. They have included such fears as that the introduction of a convertible ruble may tend to weaken the U.S. dollar, open the way for speculative “bear” attacks on the dollar and major European currencies, upset world commodity markets and prices, and touch off widespread disturbances of trade. Fears of this kind have been summarized in the phrase that a convertible ruble would be a monetary sputnik. | en | /fileasset/fileasset/IMF_Seal_blue.png | IMF eLibrary | https://www.elibrary.imf.org/view/journals/024/1960/001/article-A004-en.xml | Production
Although there continue to be wide differences of opinion about the amount of gold currently produced in the U.S.S.R., as well as about the trend of output in the postwar period, a good deal is known about production prior to World War II. The U.S.S.R. was, of course, one of the world’s large producers before 1914, and its output in that year (at the present price of $35 per ounce) was $75 million. Production dropped rapidly during 1914–18 and the subsequent years of revolutionary fighting, falling to $3 million in 1921. By the end of the 1920’s, output had recovered to prewar levels, and it expanded rapidly during the 1930’s; it was $270 million in 1936 and $220 million in 1937.1 The Soviet authorities have published no information on gold production since that date. There is little doubt that, if the U.S.S.R. had continued to apply the necessary priorities, it could have expanded gold production further. A leading Soviet textbook on economic geography, written in 1939, stated that “the U.S.S.R. has the world’s largest reserves of gold … The U.S.S.R. is second only to the Union of South Africa in the mining of gold, having already surpassed Australia, Canada, and the United States.”2 Littlepage, whose engineering experience in gold mining in the Soviet Union in the 1930’s is second to none, is authority for the statement in 1938 that the U.S.S.R. could have made further substantial increases in gold production, possibly to the level of output in South Africa, by the end of that decade.3 (At the time Littlepage made this estimate, production in South Africa was at an annual rate of more than $400 million, reaching $504 million in 1941.) Such further expansion, however, was not attained. By 1939–40, output was perhaps 15–25 per cent lower than at its peak in 1936.4
No high degree of accuracy can be claimed for any of the widely varying estimates of current Soviet gold production, which range from $215 million to $630 million per year.5 However, even the lowest estimate places the U.S.S.R. among the major producers of gold. Samuel Montagu & Co. estimated 1958 production as more than 17 million ounces (about $600 million);6 and other writers estimate production in that year at 12–15 million ounces ($420–520 million).7 The U.S. Bureau of Mines estimated production in 1958 at about $350 million.8 Alec Nove stated that it is quite possible that actual gold sales by the U.S.S.R. in recent years have been “roughly equal to current production,”9 which would imply an annual output of perhaps $250 million or $300 million. Finally, according to a report in The Northern Miner,10 Soviet gold production is at the most 6 million ounces per year ($215 million).
Estimates of the trend of Soviet gold output in recent years have been similarly conflicting. According to the reports of the U.S. Bureau of Mines, annual production of $140 million in 1942–44 increased steadily to $330 million in 1951 and 1952; in the next three years, production was slightly lower, or about $315 million per year; in 1956–58, production was at the rate of $350 million per year.11 In contrast, a German study in 1959 estimated that production increased from $80 million in 1950 to $350 million in 1956 and 1957.12 An opposite trend is suggested in a 1957 news report that “there are indications that Soviet gold production may have dropped in recent years because of a cut in manpower,”13 and in a 1958 report, which said that gold output had been falling since 1953.14
In 1957, the Soviet authorities announced that the department concerned with gold mining was being reorganized; and the new head responsible for operations stated that by 1960 he hoped to achieve a sharp increase in output and a 25 per cent reduction in costs of production.15 In late 1959, it was stated that output in some gold fields would be 12 per cent higher than in 1956, and that the use of electric dredges under construction would reduce production costs.16
The growth of Soviet gold production is reported to be largely the result of the expansion of placer mining in Siberia. Although some gold is obtained from deep mining, there has been nothing to suggest that the Soviet Union has deep gold-bearing ores which can compare in either quality or quantity with those of South Africa. About 75 per cent of Soviet gold production is said to be concentrated in the sub-Arctic Far East area, where costs of transportation are high and working conditions severe.
Gold is also obtained as a by-product of mining nonferrous metals. Since the output of nonferrous metals is large and expanding, the production of by-product gold cannot help but be significant. In periods of prosperity, by-product gold is 35–40 per cent of total gold output in the United States and about 13 per cent in Canada. In the U.S.S.R., according to some estimates, it is 10–15 per cent.
The thesis has recently been advanced that Soviet gold mining costs are very high. One estimate puts the cost of production as equivalent to at least $166 per ounce at the official rate of exchange.17 There is, of course, no way of determining the accuracy of calculations, which are obviously guesses on a grand scale, of the costs expressed in rubles. Furthermore, the conversion of ruble costs into dollars at the official rate of exchange raises serious difficulties, and has on many occasions led to questionable, if not meaningless, results. Finally, direct cost calculations of this type, even when accurate, are not good guides to Soviet export-import policies. There is some dissatisfaction in the U.S.S.R. with the principles and procedures for determining costs, which differ from those in other countries. In any case, it is not the absolute cost of gold production that determines whether it is advantageous to produce gold for export, but rather the cost of producing gold relative to the cost of producing other commodities. If the cost of producing gold, equivalent to the ruble cost converted at the official exchange rate, is five times the world price, while that of timber is six times that price, it will be more economical for the U.S.S.R. to pay for imports with gold rather than with timber.
It is clear that the U.S.S.R. places substantial emphasis upon continuing and expanding the production of gold, which is used for export, stockpiling, and maintaining a gold connection for the ruble.
Sales
The U.S.S.R. has sold substantial amounts of gold in London, Zurich, and other financial centers in recent years. No official data have been released on the amount of these sales, but estimates have been made in the West from and by a number of different sources. Though these estimates are less speculative than those of gold production, they vary widely and have been subject to large retrospective corrections, both up and down. Estimates for 1957 indicate that gold sales were 712 million ounces, valued at $260 million; these were the largest in any postwar year up to that time. Sales in 1958 are estimated at $215 million, and those in 1959 were probably somewhat larger than sales in 1957.18
The U.S.S.R. sells gold to acquire foreign exchange with which to meet deficits in its balance of payments. To the maximum extent possible, gold is sold forward to obtain the price premium which has prevailed in recent years, but its forward sales are supplemented by spot sales when necessary.19 The U.S.S.R. apparently does not wish to create the impression that it exports gold fairly regularly, and its published plans neither suggest nor require the export of gold. Though, in time, it may again provide data on gold production or sales, its official attitude continues to be one of strict secrecy. The U.S.S.R. finds gold an admirable medium (leaving aside considerations of comparative costs) for meeting relatively small payments deficits. Sales of gold can be made without publicity, and they do not call attention to deficits in the Soviet balance of payments or to any particular events which may have caused them. This advantage of gold sales for the U.S.S.R. is mirrored by the fact that Western estimates of their magnitude vary so widely. Also, sales can be made quickly, without significantly affecting the market price of gold. They do not affect established commodity market relationships or trading channels. They provoke no political outcries on the part of the countries or producers whose products are affected. For example, public reaction to Soviet sales of aluminum and tin in 1957–58 was completely different from the reaction to sales of gold, even though the former were a much smaller percentage of world production than the latter. Sales of aluminum and tin were widely regarded as unfair competition or economic warfare.20 On the other hand, sales of gold totaling as much as $250 million per year—equal to about 25 per cent of the output of the rest of the world—tend to be accepted in rational, economic terms; indeed, they may even be considered helpful.
The U.S.S.R. has been an exporter of gold for many years, though the amount sold has varied greatly from year to year. The following estimate of Soviet gold exports in the 1930’s was made on the basis of admittedly incomplete data:21
Year Exports
(million
U.S. dollars) Year Exports
(million
U.S. dollars) 1931 100 1936 10 1932 80 1937 210 1933 70 1938 120* 1934 85 1939 55 1935 25 1940 55
Year Exports
(million
U.S. dollars) Year Exports
(million
U.S. dollars) 1931 100 1936 10 1932 80 1937 210 1933 70 1938 120* 1934 85 1939 55 1935 25 1940 55
According to these data, gold exports by the U.S.S.R. in the 1930’s totaled $800 million, or about 8 per cent of production in the rest of the world. Exports of gold were particularly heavy in 1937 and 1938, years marked by trials, purges, and disorganization of production. In these two years, exports were $330 million, equal to 15 per cent of production in the rest of the world, though if allowance is made for the gold which was obtained from Spain during the Civil War and apparently hoarded, the U.S.S.R. was a net importer.
In the 11 years 1946–56, the U.S.S.R. probably sold about $800 million of gold, equivalent to 9 per cent of gold production outside the Soviet bloc. Average sales in this period were about $75 million per year, and this low figure reflects the fact that sales were negligible in the early postwar years. In the three years 1957–59, gold sales totaled more than $700 million, equivalent to 20–25 per cent of gold production outside the Soviet bloc, and average annual sales were about $245 million.
These estimates may give a misleading impression of the present importance of gold exports in the Soviet balance of payments. Exports of gold were relatively much more important in paying for Soviet imports in the 1930’s than they have been in the postwar period. In 1957, when gold sales were $260 million, exports to countries outside the Soviet bloc were about $2 billion at the official rate of exchange, and total Soviet exports were $4.4 billion. In 1938, when gold sales were at least $120 million, exports to all countries were only $250 million; in 1937, the ratio of gold sales to exports was even larger.22
As a major exporter of gold, the U.S.S.R. naturally has an interest in the price of gold,23 though there have been no official expressions of opinion about the present price of $35 an ounce. Indeed, it may well be felt that any argument advanced by the U.S.S.R. might actually damage in some quarters the case for a higher price. Nevertheless, in 1958, the Deputy Premier of the U.S.S.R., Mikoyan, was reported to have urged an increase in the price of gold, arguing that the present price was an “artificially established” one, and that “the difference between this price and the one that should exist amounted to tribute paid by the countries that sell gold to the United States.”24
If the U.S.S.R. were actively interested in forcing the United States to increase the price of gold, it should withhold gold rather than sell it. If U.S.S.R. policy were motivated by the argument sometimes put forward that the inadequate supply and production of gold outside the communist bloc are retarding economic expansion, it would also follow the policy of selling as little gold as possible. In these circumstances, withholding gold would be economic warfare on a grand scale. Increased gold sales would, on the contrary, strengthen the financial system of the non-Soviet world and make it easier to maintain the price of gold at $35 an ounce.
Stocks
Estimates of the gold holdings of the U.S.S.R. vary greatly. A number of estimates are in the neighborhood of $8 billion; one or two estimates are considerably higher; while yet others set holdings at only a fraction of this amount.25 Their size has not been reported by the U.S.S.R. since the 1930’s.26 Estimates of current gold reserves are based on data for production and sales, and are naturally subject to wide errors. Nevertheless, the gold holdings of the U.S.S.R. must be substantial. These would include the gold received from Spain during the Spanish Civil War and the excess of production over sales for about 30 years. Stalin reportedly attached great importance to gold production and reserves.27 These reports are consistent with the large expansion of output in the 1930’s—at great cost in human lives and suffering—and with the fact that production of gold was continued and even expanded during World War II. There appears to be considerable attention to gold production under the Khrushchev regime.
On a number of recent occasions, the U.S.S.R. has linked the idea of expansion of trade with the rest of the world to the grant of substantial lines of credit. For example, this point is reported to have been raised by Macmillan and Khrushchev in their discussions in the spring of 1959 on increasing trade between Great Britain and the U.S.S.R., with the former reportedly saying that he would be glad to accept gold in payment for goods, and the latter replying that the U.S.S.R. did not have any gold. Khrushchev’s denial is, of course, to be interpreted figuratively. The U.S.S.R. has a substantial quantity of gold, even if it is probably much less than the large amounts often mentioned. Khrushchev’s denial certainly does not mean that the Soviet gold holdings are small. His views on the role of gold—and his reasons for shifting attention away from gold—were implied during a press interview in 1958:
Question: We understand, Mr. Khrushchev, that your policy consists in balancing export and import so as to get by without the purchase and sale of gold.
N. S. Khrushchev: You won’t get very far on gold reserves alone, there is always a limit to them, whereas the development of the economic potential and the production of commodities is the capability of the nation, the capability of the people, and all this is always richer than gold reserves. Economic relations between countries should be developed mainly on the basis of exchange of commodities, in other words, on the basis of purchase and sale. We do not deny that gold does play its part in trade and we are not advocates of sitting on sacks of gold.28
These views, which were not further elaborated, are, of course, not novel or surprising. The U.S.S.R. knows that part, if not all, of its gold production will have to be exported to pay for imports; it wishes to increase its exports of certain types of goods but it would like to increase its imports even more; and it would prefer to pay for some of these additional imports with credits, which would ease the strain of exporting. The U.S.S.R. may also be of the opinion that it might receive easier economic, and less suspicious political, treatment if it simultaneously increased its imports and became a debtor on a substantial scale.
These considerations do not, however, explain why the U.S.S.R. has gone to such pains to accumulate what must be considered, by any standard, as large gold reserves. The answer to this question is probably to be found from an examination of the three following considerations.
First, the U.S.S.R. has accumulated gold both to meet fluctuations in its balance of payments and to serve as a “war chest.” Such accumulation is not unusual for any country; indeed, given the inability of the U.S.S.R. to obtain credits on a significant scale, it has been indispensable. After the Revolution, the Soviets had periods when they had little to export except gold—and on several occasions they found it difficult to export that.29 Since those days, the U.S.S.R. has had balance of payments deficits, some of which were obviously unplanned, and it is clear that state planning is no guarantee against future deficits. Time and again the U.S.S.R. has encountered difficulties, and adverse political reactions, in trying to expand exports of one commodity or another to finance such deficits. Gold is practically the only exception to this experience. Lenin’s essay in 1921, The Importance of Gold Now and After the Complete Victory of Socialism, is often quoted to the effect that gold is useless—“when we conquer on a world scale I think we shall use gold for the purpose of building public lavatories in the streets of several of the large cities of the world. This would be the most ‘just’ and educational way of utilizing gold.” But if Lenin considered gold useless in the socialist future, he considered it necessary in the capitalist present. As he explained it:
However “just,” useful, or humane it would be to utilize gold for this purpose, we nevertheless say: Let us work for another decade or so with the same intensity and with the same success as we have been working in 1917–21, only on a wider field, in order to reach the stage when we can put gold to this use. Meanwhile, we must save the gold in the R.S.F.S.R., sell it at the highest price, buy goods with it at the lowest price. “When living among wolves, howl like the wolves.”30
Secondly, the U.S.S.R. has produced gold as a by-product of other things. The term by-product is used here not in a technical sense (i.e., a by-product of copper or other metals) but rather in a political and social sense. The Soviet system in the 1930’s produced hundreds of thousands of persons who had to be punished, removed from European Russia, and put to work at jobs that required only the simplest tools. Pick and shovel brigades in the remotest recesses of Siberia met these requirements; and when these brigades worked on the extremely rich placer deposits of Kolyma, they produced large amounts of gold. Later, prisoners of war and political prisoners from nations that were overrun provided additional labor on a large scale. As these sources of cheap labor dried up after the war, the labor force fell and mechanization and rationalization became indispensable if production was to be maintained and expanded. But before they became indispensable, some 20 years had been gained, billions of dollars of gold had been produced, and the settlement of remote areas had been facilitated.
It may be that “with the virtual end of forced labor, bearing in mind the remote Arctic location of Soviet gold mines, it seems uneconomic to mine gold for sale abroad at $35 an ounce. It would make better sense to sell other things, including tin and aluminum.”31 On the other hand, it may be argued that the high cost and the comparative disadvantage of gold production have not been proved conclusively; that the stable market for gold compensates in part for its comparatively low price; and that the price of gold may be increased.
Thirdly, the U.S.S.R. attaches great importance to gold for internal purposes. To quote from a recent Soviet textbook, Political Economy:32
Of course only a monetary commodity which itself has value can have the function of a measure of value—such as gold. In the Soviet Union and the other countries of the socialist camp gold plays the part of universal equivalent. Soviet currency has a gold content, being tokens of gold.
In socialist society money can only fulfill the functions of a measure of the value of commodities by virtue of its connection with gold … Soviet money retains the historically derived connection with gold.
This statement is, of course, almost identical with that of Marx: “Only insofar as paper-money represents gold, which like all other commodities has value, is it a symbol of value.”33
The attitude of the U.S.S.R. toward a gold-connected money, whatever this may mean in respect to the Soviet money supply, is firmly rooted in Marxian doctrine. It has been suggested (not without a certain wry humor) that the Soviet attitude toward gold is actually more Victorian than the attitude of the West.
The previous discussion has made it clear that any estimate of Soviet gold holdings is subject to very wide error. Nevertheless, an estimate of the probable range of these holdings may have some limited usefulness. Gold holdings were last reported as $840 million in 1935. In the period 1936–59, these holdings were increased by the gold obtained from Spain during the Civil War, amounting to more than $500 million, and by production, estimated at from somewhat less than $5 billion to somewhat more than $7 billion; and they were reduced by sales amounting to at least $2 billion. The combination of these estimates would suggest that Soviet gold holdings at the end of 1959 were in the range of $4.0–6.5 billion.
Ruble deposit balances
The establishment of a convertible ruble would imply a belief that foreigners were willing to hold deposit balances in rubles, in part because they were willing to conduct some of their international trade in rubles. The ruble would not be made convertible into gold if it were expected that rubles would in fact be converted, for this would be equivalent to selling gold. The expectation must be that as a general rule the rubles would not be converted.
Ruble balances could be created if the U.S.S.R. ran a balance of payments deficit and its creditors accepted payment in ruble deposits. The U.S.S.R. might secure genuine advantages if it could persuade foreigners to build up such deposit balances. It would obtain foreign goods by a process equivalent to borrowing at short term, with the prospect of paying little interest on the amount borrowed. It could thus increase its imports without increasing its exports, or, alternatively, reduce or eliminate its sales of gold while maintaining its exports unchanged.
Foreigners could perhaps be persuaded to hold ruble balances willingly for essentially the same reasons as they now hold dollar or sterling balances. They could build up working balances which would be drawn upon when receipts from exports did not exactly match payments required for imports, and use these balances either to pay for future imports or to buy other currencies. Conceivably, these balances could be set up under interest-earning arrangements. Nevertheless, for reasons discussed below, it is unlikely that in the near future these considerations would be effective in relation to ruble balances.
Certain countries already have one important immediate incentive to hold ruble balances arising from the balance of trade. The U.S.S.R. has a substantial volume of trade. It offers the ever present attraction that it may greatly increase this volume, and the ever present threat that it can sharply redirect it. Soviet trading is highly centralized on a state basis and hence is conceived largely in bilateral terms. The U.S.S.R. will not necessarily import from all the sources of supply with which it can do business at the same price, nor will it always export to all countries at the same price. A recent study showed substantial differences between the prices paid by or to other Soviet bloc countries and those paid by or to other European countries; furthermore, there are large differences among the countries in each group.36 The terms of trade in any particular situation may be made so favorable that a country may be induced to hold “swing balances” in rubles as part of the quid pro quo. On several occasions the U.S.S.R., in accordance with a bilateral arrangement, has paid more than the world price. In such transactions the U.S.S.R. usually exports after it imports, so that the partner country would hold a ruble deposit balance until the transaction had been completed. Balances may also arise when the U.S.S.R. agrees to export capital goods, which may have a long delivery term, and to accept in payment consumer goods which can be delivered immediately.37
Short-term capital movements in the form of gold, dollars, and other convertible currencies could create ruble balances. Deposits denominated in gold rubles could be attracted by competitive rates of interest and strong security against devaluation. If these deposits were set up with gold, the U.S.S.R. could sell the gold deposited with it, invest the proceeds in world money markets, cover its gold obligations with its substantial gold reserves and its future gold production, and make a profit into the bargain.38 On the other hand, if the U.S.S.R. were to spend the foreign currency equivalent of its ruble deposits rather than to invest in money market securities, it would in effect be the recipient of a short-term loan at a rate of interest that consisted of the rate it paid its depositors plus its own handling costs. The development of a short-term money market in Moscow would certainly depend upon simultaneous far-reaching changes in the trading relations between the U.S.S.R. and the rest of the world. At present, such changes seem to be quite out of the question. Nevertheless, although these operations may sound fantastic now, they are by no means impossible at some future time.
Convertibility of ruble into other currencies and goods
The currencies that play an important role in international finance are convertible not only into other currencies but also into goods. It is precisely for this reason that these currencies are readily accepted in other countries. For the U.S.S.R., however, goods convertibility would be much more difficult to achieve than currency convertibility.
The ruble would be externally convertible if it could be used without restriction to buy other currencies. It could be convertible at some predetermined rate, or within predetermined margins on either side of a parity rate. It could be convertible even if there were no parity, as the fluctuating rate of the Canadian dollar testifies. But if wide use is to be made of a currency which has no parity and an indeterminate spread, there must be some assurance that the rate will not be officially manipulated. Fluctuations determined by market forces are to some extent predictable—or at least, persons operate in such markets on the idea that they are predictable.
For many years the ruble has been formally equal to 0.222168 gram of fine gold, and there is little doubt that a convertible ruble would continue to have a stated parity in terms of a quantity of gold. Though circulation is restricted to the U.S.S.R., the ruble is, nevertheless, traded on a number of black markets at a very large discount from its official dollar parity and at a substantial discount from the rate extended to tourists.
It is unlikely that any substantial volume of capital funds would move to the U.S.S.R. unless there were some guarantee of the rate at which these funds might be repatriated. If the Soviet authorities were prepared to maintain a dollar-ruble rate at par, funds could flow into or out of ruble balances solely on the basis of interest differentials plus costs. On the other hand, if the exchange rate fluctuated between predetermined margins, the interest differentials required to attract and retain funds would be larger. This might imply the development of forward quotations for dollars in terms of rubles.
The U.S.S.R. could easily make the ruble externally convertible in view of its control over the balance of payments and internal prices. The floating supply of rubles in the hands of foreigners could be controlled by bilateral trading deals, and the ruble could be made formally convertible because, in fact, no one would have rubles to convert.
As stated above, the establishment of goods convertibility for the ruble is much more problematical.39 Here the question is what goods a foreigner may buy with rubles, and what prices, terms, and conditions may be applicable to such purchases.
In free economies—such as the United States and the countries of Western Europe—an effort is made to give purchasers the maximum freedom of choice and to facilitate a high degree of competition to make this freedom effective. When there is already a high standard of living, and a fairly flexible economy, there are large reservoirs of capacity and investment to meet any new demands within a reasonable period of time. Subject to some limitations applicable to goods having strategic or defense importance, citizens and residents with domestic money can use this money to buy anything they wish. Even more important in this connection, all the interested foreigners also can buy the same goods and at the same prices. When there are limitations, most of them apply to citizens and foreigners alike.
The conditions in the U.S.S.R. are very different. The U.S.S.R. economy has expanded rapidly in the face of considerable shortages, and it is always pushing hard against capacity in one important field or another. Over very long periods, it has employed rationing, differential pricing, “expediting,” and the principle of first come, first served to allocate short supplies. There are many commodities which a Russian holding rubles cannot buy at any price. There are even more which a foreigner cannot buy at all, let alone buy at a reasonable price or within a reasonable delivery period. Given the number of tight spots and bottlenecks in the Soviet economy, there are many commodities which cannot be exported in any substantial volume without threatening the disruption of centralized production plans. Failure on the part of a Soviet citizen to produce an assigned quantum of goods may be severely punished (and has not infrequently been considered sabotage), and any proposal to permit free foreign purchases of scarce goods would be much the same as a request to authorize economic warfare.
There is thus a very great difference between what Soviet goods a foreign holder of rubles can buy and what, for example, U.S. goods a foreign holder of dollars can buy. A holder of rubles can buy only what the Soviet Government wishes to sell; a holder of dollars can buy anything at the prevailing price. Since it is anticipated that Soviet bilateral deals will balance, a country left with a ruble credit at the end of a deal may be in a worse position for the next deal than if it had come out even.40 The reason is that, with respect to any trading negotiations, the U.S.S.R. prefers to have payment for its exports in imports rather than in balances of its own currency.
There are three principal reasons why the ruble is unlikely to be made freely convertible into goods in the near future. First, many goods are not generally available either for domestic purchase or for export. Second, Soviet prices reflect not only differential commodity tax burdens, but also a structure of costs that differs widely from that of other major countries. As a result, there is great dissimilarity between the structure of Soviet prices and that of world prices. Specifically, consumer goods are much more expensive relative to capital goods in the U.S.S.R. than in Europe and the United States. The relationship of the price of one good to the price of another may function more or less satisfactorily for internal pricing41 without indicating the relationship at which the U.S.S.R. will trade one or the other to foreigners. Relative prices reflect all the singularities of Soviet policy with respect to social and political objectives, costing, and pricing.42 Third, external prices are affected by an additional distorting element, the overvaluation of the ruble.43 The present exchange rate of four rubles to the dollar is not realistic, but this fact is not important to the U.S.S.R. The exchange rate does not have to convert domestic ruble prices into realistic world prices, since it is not designed to move exports or to equilibrate foreign receipts and payments in terms of a price mechanism. If the U.S.S.R. wishes to export goods, it is not bothered by calculations of the domestic price converted at parity—it simply sells on the basis of the world price. The extent to which it shades the world price depends upon the stability of that price and how anxious the U.S.S.R. is to sell quickly.
When the U.S.S.R. wishes to sell, the world price is controlling. When the U.S.S.R. does not wish to sell, a foreign buyer would not be able to buy at any price or, to the same effect, he might be quoted an impossible export price based on the domestic price converted at the official rate of exchange.
A speech by K. V. Ostrovityanov to the 21st Congress44 described parts of the above situation in the following words:
The growth of international socialist division of labor and economic connections between socialist countries inevitably will call forth growth and development of monetary exchange. On the other hand, monetary-exchange relations will develop into interrelations between countries belonging to the two different systems—socialism and capitalism… .
The development of monetary-exchange relations in the economic interrelations between countries of the socialist camp will call for, of necessity, a single standard for the comparison of costs of production in a given country with costs in other countries of the world system of socialism and also for comparison of competitive totals of the two systems—socialism and capitalism… .
At the present time the countries of the socialist camp are concluding trade agreements between one another based on world prices which have been corrected suitably45 in order to give them great stability… .
The goods convertibility of the ruble is and will continue to be severely limited. This is clearly the situation between the U.S.S.R. and the countries outside the Soviet bloc. It is also, but less clearly, the situation within the bloc, where trade is essentially on a barter basis. The bloc countries several years ago instituted a so-called system of multilateral clearings to obtain some of the advantages of convertibility. This system was expanded in late 1959 to provide interconvertibility of bloc currencies, though the terms and conditions of this inter-convertibility were not announced.46 The effectiveness of any such agreements would continue to depend upon whether, with the funds obtained through conversion, a member of the bloc could obtain from another member, on fair terms, the goods it wanted. It is unlikely that any agreements on convertibility could assure this. The bloc might set up arrangements that formally looked like the European Payments Union, or some system of convertibility on a regional basis, which, however, functioned quite differently. Monetary refinements by themselves do not eliminate the barter character of U.S.S.R. trade that the combination of state trading, shortages of goods, and distortions of internal prices and exchange rates makes inevitable. Nor does the introduction of a third country into a two-sided barter transaction eliminate the barter element. Thus, when Burma earned a ruble balance with the U.S.S.R. by selling rice, and wanted to buy goods in Czechoslovakia with this balance, it engaged in three-cornered negotiations to bring the deal off. The same sort of problem would arise if, for example, Poland wished to spend ruble balances in Czechoslovakia.
In short, the U.S.S.R. could easily make the ruble technically convertible into other currencies within the Soviet bloc, or in a considerably wider area. The strict controls that are exercised over imports, exports, and the balance of payments guarantee, however, that such convertibility would impose no significant changes on the U.S.S.R. On the other hand, it would have no real economic advantages, though the establishment of convertibility in this sense might be good propaganda.
If the U.S.S.R. became a center for short-term capital movements by accepting ruble deposits denominated in gold, and if it paid interest on these deposits, it could enter the banking business in competition with other centers, scoring certain economic and propaganda advantages. But any possibility that the U.S.S.R. can, in any meaningful sense, make the ruble convertible into goods, either at the present time or for years to come, is very remote. This deficiency would severely limit any use that other countries might make of the ruble, even if it were made technically convertible. It has been recognized in the U.S.S.R. itself that the ruble can become an international currency only when it is responsible for a much larger share of the world’s production and international trade, and when prices in the communist countries are made more competitive than they now are with those in capitalist countries.47 The realization of these objectives requires not only the adjustment or rationalization of relative prices in the U.S.S.R. but also the adoption of a realistic exchange rate. | ||||
9245 | dbpedia | 0 | 58 | https://www.global-exchange.com.au/en/currencies-of-the-world/russian-ruble | en | Russian Ruble | https://www.global-exchange.com.au/documents/20151/31618/favicon.png/54a53a66-bc81-dbec-5206-5cee30bb0cd9?t=1667562804900 | https://www.global-exchange.com.au/documents/20151/31618/favicon.png/54a53a66-bc81-dbec-5206-5cee30bb0cd9?t=1667562804900 | [
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] | null | [] | null | en | https://www.global-exchange.com.au/documents/20151/31618/favicon.png/54a53a66-bc81-dbec-5206-5cee30bb0cd9?t=1667562804900 | https://www.global-exchange.com.au/en/currencies-of-the-world/russian-ruble | The rouble became the currency of Russia 500 years ago and it is subdivided into 100 kopeks.
Origins and history
The origins of the rouble date back to 1704, when Peter the Great standardised this coin to 28 grams of silver. On 17th December 1885 a new standard that did not change the silver rouble but reduced the gold content to 1161 grams was adopted.
Later on, during the reign of Nicholas I, the silver rouble was declared as monetary unit and main instrument of payment. Banknotes, on the other hand, were to become a supporting instrument of payment.
Despite the reforms, innovations and trials undergone by the rouble, the currency did not lose value until the Russian Revolution in 1917.
During the dissolution of the Soviet Union in 1991, the Russian currency experienced a modification in its design. At this time, the Central Bank of the Soviet Union (Gosbank) put in circulation new banknotes and coins, which were also issued by the Russian Bank in 1992. That very same year, the Bank of Russia issued its first series of Russian rouble banknotes with a nominal value of 5,000 and 10,000 roubles.
In 1993 there was a new reform that, along with the new banknotes issued, would put a stop to the circulation of soviet models.
In March 2014 the Russian rouble was introduced into the Republic of Crimea and the federal city of Sevastopol, after their annexation to the Russian Federation.
Current Russian rouble banknotes and coins
Today, banknotes in denominations of 5, 10, 50, 100, 500, 1000 and 5000 Russian roubles are in circulation.
Regarding coins, denominations of 1, 5, 10 and 50 kopeks, and 1, 2, 5 and 10 roubles are in use. | ||||
9245 | dbpedia | 1 | 55 | https://www.makemytrip.com/tripmoney/currency/russian-ruble | en | MakeMyTrip | [] | [] | [] | [
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9245 | dbpedia | 0 | 19 | https://www.globocambio.co/en/currencies-of-the-world/russian-ruble | en | Russian Ruble | https://www.globocambio.co/documents/20151/31618/favicon.png/54a53a66-bc81-dbec-5206-5cee30bb0cd9?t=1667562804900 | https://www.globocambio.co/documents/20151/31618/favicon.png/54a53a66-bc81-dbec-5206-5cee30bb0cd9?t=1667562804900 | [
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] | null | [] | null | en | https://www.globocambio.co/documents/20151/31618/favicon.png/54a53a66-bc81-dbec-5206-5cee30bb0cd9?t=1667562804900 | https://www.globocambio.co/es/monedas-del-mundo/rublo-ruso | The rouble became the currency of Russia 500 years ago and it is subdivided into 100 kopeks.
Origins and history
The origins of the rouble date back to 1704, when Peter the Great standardised this coin to 28 grams of silver. On 17th December 1885 a new standard that did not change the silver rouble but reduced the gold content to 1161 grams was adopted.
Later on, during the reign of Nicholas I, the silver rouble was declared as monetary unit and main instrument of payment. Banknotes, on the other hand, were to become a supporting instrument of payment.
Despite the reforms, innovations and trials undergone by the rouble, the currency did not lose value until the Russian Revolution in 1917.
During the dissolution of the Soviet Union in 1991, the Russian currency experienced a modification in its design. At this time, the Central Bank of the Soviet Union (Gosbank) put in circulation new banknotes and coins, which were also issued by the Russian Bank in 1992. That very same year, the Bank of Russia issued its first series of Russian rouble banknotes with a nominal value of 5,000 and 10,000 roubles.
In 1993 there was a new reform that, along with the new banknotes issued, would put a stop to the circulation of soviet models.
In March 2014 the Russian rouble was introduced into the Republic of Crimea and the federal city of Sevastopol, after their annexation to the Russian Federation.
Current Russian rouble banknotes and coins
Today, banknotes in denominations of 5, 10, 50, 100, 500, 1000 and 5000 Russian roubles are in circulation.
Regarding coins, denominations of 1, 5, 10 and 50 kopeks, and 1, 2, 5 and 10 roubles are in use. | ||||
9245 | dbpedia | 0 | 81 | https://www.bbc.com/news/blogs-news-from-elsewhere-40043311 | en | Russian explorers find 'swamp' of Soviet money | [
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"News from Elsewhere",
"www.facebook.com"
] | 2017-05-25T09:39:32+00:00 | Group finds a billion roubles in worthless banknotes at abandoned mine near Moscow. | en | BBC News | https://www.bbc.com/news/blogs-news-from-elsewhere-40043311 | A group of explorers in Russia have found around a billion roubles in old Soviet money at an abandoned mine, but it's all completely worthless.
The group from Saint Petersburg, who publish a blog on abandoned sites across Russia, came across the money after following rumours that large quantities of cash had been dumped in old missile silos near Moscow after the collapse of the Soviet Union, the Komsomolskaya Pravda, external news website reports. After travelling for several hours across rough terrain in Russia's Vladimir region, they found the mine overflowing with cash.
The site contains an estimated one billion roubles ($18m; £13.5m at current exchange rates, or $33.3m at the "official" Soviet rate in 1991) in Soviet Union banknotes of various denominations issued between 1961 and 1991, all no longer legal tender in the Russian Federation. The mine had been flooded in recent years, leaving what was essentially a swamp of banknotes bearing the face of Vladimir Lenin, the explorers' YouTube channel, external shows.
According to their account of events, external, elderly locals told the team about the mine, but said that nobody dared go near the place because it was linked to the Soviet Union's ballistic missile programme, and contaminated with radiation. However, Geiger counters showed that this was not the case.
Team member Olga Bogdanova said that the sight of such "riches" was difficult to convey in words. "There's delight and some sadness, because you realise that this is a bygone era which will never return, that all this money would have been more than enough for anybody," she said. Just 100 roubles would have been a very good salary back in Soviet times.
Fellow explorers Anton Alekseev and Sergey Volkov were subsequently interviewed on Rossiya1 television, external, where the presenter noted that the cash was dumped following a government decision at the end of the Soviet Union, and that this might be one of at least three such sites across Russia.
The video has caught the imagination of social media users, many of whom wish that the cash was still legal tender. "I would dive in there like Scrooge McDuck," says one user, while another exclaimed, "I wish I could have a time machine, return with a pack of those banknotes and buy myself a controlling stake in Google, Gazprom, Rosneft, and never work again." | |||||
9245 | dbpedia | 1 | 22 | https://www.investopedia.com/terms/forex/r/rub-russian-ruble.asp | en | Russian Ruble (RUB): Overview of Russia's Currency | [
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"Lucas Downey"
] | 2008-06-30T13:00:00-04:00 | The Russian ruble (RUB) is the currency of Russia and is the second-oldest currency still in circulation, behind the British pound sterling. The Russian ruble is made up of 100 kopeks. | en | /favicon.ico | Investopedia | https://www.investopedia.com/terms/forex/r/rub-russian-ruble.asp | What Is the Russian Ruble (RUB)?
The Russian ruble (sometimes spelled rouble) is the national currency of the Russian Federation. The ruble is the second-oldest currency still in circulation, behind the British pound. It is made up of 100 kopeks.
Understanding the Russian Ruble (RUB)
The ruble (RUB) has been used since the 13th century and has been through a number of incarnations during that time, including multiple revaluations and devaluations. The most recent changes occurred before the fall of the Soviet Union in 1992 and during the redenomination in 1998. The 1998 redenomination made one new ruble worth 1000 old rubles.
In recent years, the currency's exchange rate has generally tracked global commodity prices, especially oil prices, because Russia's economy heavily depends on exports of oil, natural gas, and other natural resources. The ruble collapsed in the second half of 2014, losing about half its value versus the U.S. dollar as global oil prices plunged. Economic and financial sanctions imposed by the U.S. and European Union on Russia in July 2014 over its invasion and annexation of Crimea also helped weaken it.
The Ruble and Geopolitics
The ruble’s exchange rate is not only affected by economic factors, but also by geopolitical events and tensions involving Russia and its neighbors. In recent years, the ruble has experienced significant volatility and depreciation due to several crises and conflicts that have strained Russia’s relations with the West and other countries.
One notable event was the annexation of Crimea by Russia in 2014, which triggered international sanctions and condemnation from the United States, the European Union, and other countries. The sanctions targeted key sectors of the Russian economy, such as energy, finance, defense, and trade, and restricted access to foreign capital and technology. The ruble plunged to record lows against the dollar and the euro in late 2014 and early 2015, as investors fled Russian assets amid uncertainty and risk. Prior to this event, the USD/RUB exchange rate was around 30 rubles to the dollar; following the invasion it rose to 50-60 rubles to dollars, where it remained for several years.
Following Russia’s large-scale invasion of Ukraine in February 2022, the U.S., the EU, and other nations imposed another round of even stricter sanctions on Russia’s largest financial institutions and enterprises, including Russia’s central bank and energy giant Gazprom. At the same time, many Western corporations suspended or ceased doing business inside of Russia. These measures sent the value of the ruble plummeting to record lows against foreign currency, and briefly touching nearly 135 rubles to the dollar.
As the Russia-Ukraine conflict has raged, the ruble settled into a trading range of around 70 to 80 RUB per USD; however, it remains volatile. For instance, in June of 2023, when the private military contractor Wagner Group mutinied and briefly marched toward Moscow, the ruble sank to 87 to the dollar — its weakest level since the early days of Russia's invasion of Ukraine — as it revealed internal political tensions and fragility for Putin's regime.
Russia's Economy
Russia is more than twice as large as the contiguous 48 U.S. states and is blessed with enormous natural resources. Yet Russia’s annual gross domestic product (GDP) ranked only 11th worldwide in 2021, is only 7.72% the size of the U.S. economy. That's because Russia relies heavily on exports of natural resources, rather than higher-value-added industries. In fact, in terms of GDP, Russia trails much smaller countries, such as Italy and France.
Ongoing political tensions have hurt the Russian economy, as the country has repeatedly faced sanctions from the international community. The value of the ruble along with many Russian companies plummeted after Russia began its invasion of Ukraine in February 2022.
The Digital Ruble
President Vladimir Putin announced in 2017 that the Bank of Russia would issue a Central Bank Digital Currency (CDBC). Though many countries are now exploring CBDCs, Russia was one of the earliest countries to do so. In December 2021, a prototype of the digital ruble was completed and the first transfers using the digital ruble's platform were successful. The Bank of Russia announced that 12 Russian banks were ready to begin using the digital ruble.
In February 2022, many commentators suggested Russia could evade international sanctions using cryptocurrency. Though a CBDC is much different from a private cryptocurrency, a digital ruble could limit Russia's dependence on using foreign currencies, such as the U.S. dollar.
The Bottom Line
The Russian Ruble (RUB), among the oldest currencies still in circulation, is heavily influenced by global oil prices, considering Russia's key role as an exporter of oil and natural gas. The Ruble has witnessed multiple transformations since its inception in the 13th century, with the latest changes occurring due to the fall of the Soviet Union in 1992 and the redenomination in 1998. Geopolitical events, particularly Russia's conflicts with Ukraine and the sanctions imposed from various nations, have played substantial roles in devaluing the Ruble's exchange rate. Despite the tumultuous economic climate, Russia has pioneered in the digital currency space with the introduction of a Central Bank Digital Currency. The Bank of Russia maintains control over the Ruble's value through various monetary policy tools. | ||||
9245 | dbpedia | 0 | 39 | https://www.geeksforgeeks.org/countries-using-russian-ruble-know-everything-about-russian-ruble/ | en | Know Everything About Russian Ruble | [
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"GeeksforGeeks"
] | 2023-09-22T04:04:56 | A Computer Science portal for geeks. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. | en | GeeksforGeeks | https://www.geeksforgeeks.org/countries-using-russian-ruble-know-everything-about-russian-ruble/ | In this article, we are going to see the countries that use Russian Ruble, along with some other important information. The Russian Ruble, also spelled rouble, is the currency of Russia, the former Soviet Union, and Belarus.
The notes on the Russian ruble are printed in Moscow’s state factory and the Russian coins are stamped in both countries Moscow and the st. Petersburg. Its currency is one of the strong currencies in the world, and Russia is one of the largest oil exporters in the world because of its powerful currency.
Russian Ruble Symbol:
The Ruble sign “₽” is a currency sign used to represent the Ruble in Russia. It is a “P” with a horizontal stroke.
Russian Ruble – Exchange Rate:
US Dollar
1.00 Russian Rubel = 0.015 US Dollar
Indian Rupee
1.00 Russian Ruble = 1.33 Indian Rupee
The Russian Ruble is 105% more expensive than Indian Rupee.
Euro
1.00 Russian Ruble = 0.016 Euro
Nigerian Naira
1.00 Russian Ruble = 6.91 Nigerian Naira
Bangladeshi Taka
1.00 Russian Ruble = 1.57 Taka
Pound
1.00 Russian Ruble = 0.014 Pound Sterling
Peso
1.00 Russian Ruble = 0.93 Phillippine peso
Russian Ruble: History
The Russian Ruble is the authorized currency of the Russian Federation and was introduced in the 13th century. The first biggest currency in the world is the pound sterling on the other hand the ruble is the second oldest currency in the world, which has been used since the 14th century. In 1992, the Belarusian ruble currency substituted the Russian ruble as the country’s authorized currency. The ruble was reintroduced as the Belarusian currency after signing an agreement in 1994. The ruble is one of the most effective currencies in the world, and it is also the currency of Belarus.
How Did the Ruble Get its Name?
Ruble’s name comes from the word Rubit. Rubit is a small piece cut from Grivna which is the too costly metal of that time. The layout of the Russian currency changed in 1991.
What Was the Old Russian Currency?
The oldest currency used in Russia was the Soviet ruble. The Soviet ruble was first introduced in 1922 as the currency of the Union of Soviet Socialist Republics, popularly called the USSR. At that time banknotes in sects of 5, 10, 50, 100, 500, 1000, and 5000 Russian rubles were in circulation in 1897, a gold ruble was substituted for the silver one. After World War First, gold coins disappeared from spreading countries and notes became inconvertible. During the term of the Russian revolt, inflation of astronomical proportions pushed the ruble value valueless. During the post world war second reform of 1947, the chervonets were deserted as the financial measure and the ruble was repaired.
How Old is the Russian Ruble?
The rouble was the currency of Russia for 500 years and it is subdivided into 100 kopeks.
In the current year 2022, the three variants of rubles:
The Russian ruble (RUB, ₽) in Russia, Abkhazia, and South Ossetia,
The Belarusian ruble (BYN, Br) in Belarus
TheTransnistrian ruble in Transnistria.
Summary:
The Ruble is the official currency of Russia and the most powerful currency in the world. The ruble also circulates in the Belarus market. Russia officially declared its currency ruble in 1991 and after that Russian trade proceeded with the currency ruble. Russia is one of the most powerful countries in the world and the area of Russia is also an enormous area. Russia is the motherland of literature and has 12 active volcanos. | |||||
9245 | dbpedia | 2 | 36 | https://www.wikidata.org/wiki/Q615640 | en | Soviet ruble | [
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SUR | |||||
9245 | dbpedia | 1 | 63 | https://www.cbc.ca/news/business/ruble-value-1.6935836 | en | Russian ruble value plunges to lowest level since early days of Ukraine invasion | [
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"The Associated Press"
] | 2023-08-14T16:32:00+00:00 | The Russian ruble on Monday reached its lowest value since the early weeks of the war in Ukraine as Moscow increases military spending and Western sanctions weigh on its energy exports. | en | /a/apple-touch-icon.png | CBC | https://www.cbc.ca/news/business/ruble-value-1.6935836 | The Russian ruble on Monday reached its lowest value since the early weeks of the war in Ukraine as Moscow increases military spending and Western sanctions weigh on its energy exports.
It led Russia's central bank to announce an emergency meeting for Tuesday to review its key interest rate, raising the likelihood of an increase in borrowing costs that would support the flagging ruble.
The Russian currency had passed 101 rubles to the dollar, continuing a more than 25 per cent decline in its value since the beginning of the year and hitting the lowest level in almost 17 months. The ruble recovered slightly after the central bank's announcement.
Oreshkin said Russia's central bank has "all the tools necessary" to stabilize the situation and said he expected normalization shortly.
Bank deputy director Alexei Zabotkin told reporters Friday that it is adhering to a floating exchange rate because "it allows the economy to effectively adapt to changing external conditions."
Analysts say the weakening of the ruble is being driven by increased defense spending — leading imports to rise — and falling exports, particularly in the oil and natural gas sector. Importing more and exporting less means a smaller trade surplus, which typically weighs on a country's currency.
The Russian economy is now "working on different types of state orders related to the war, such as textile enterprises, pharmaceuticals and the food industry," said Alexandra Prokopenko, nonresident scholar at the Carnegie Russia Eurasia Center and a former Russian central bank official.
Pivoting the entire economy to a war footing not only drives up imports but also raises the prospect of worsening inflation, she said.
To help lessen that prospect, the central bank said last week that it would stop buying foreign currency on the domestic market until the end of the year to try to prop up the ruble and reduce volatility.
Russia typically sells foreign currency to counter any shortfall in revenue from oil and natural gas exports and buys currency if it has a surplus.
Raising rates
The central bank also enacted a big increase of 1 per cent to its key interest rate last month, saying inflation is expected to keep rising and the fall in the ruble is adding to the risk. The next meeting to discuss Russia's key interest rate was planned for 15 September.
On Monday, some Russians in Moscow appeared concerned about the weakening currency.
"Prices will rise, which means that the standard of living will fall. It has already fallen, and it will fall even more — there are definitely more poor people," said Vladimir Bessosedny, 63, a retired teacher.
Others hoped the fall of the ruble was temporary and that it would stabilize.
In January, the ruble traded at about 66 to the dollar but lost about a third of its value in subsequent months.
After Western countries imposed sanctions after the invasion of Ukraine in February 2022, the ruble plunged as low as 130 to the dollar, but the central bank enacted capital controls that stabilized its value. By last summer, it was in the 50-60 range to the dollar.
Zabotkin on Friday dismissed speculation that capital flight from Russia also was to blame for the ruble's fall, saying the idea was "not substantiated." | ||||
9245 | dbpedia | 0 | 78 | https://www.businessinsider.com/russia-ruble-crisis-looks-like-the-soviet-union-2014-12 | en | Russia's Ruble Crisis Is Following The Same Pattern That Destroyed The Soviet Union | https://i.insider.com/54903606dd0895657f8b4569?width=1200&format=jpeg | https://i.insider.com/54903606dd0895657f8b4569?width=1200&format=jpeg | [
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"Mike Bird"
] | 2014-12-16T13:39:00+00:00 | Russia's crisis in 2014 feels eerily familiar to the oil glut that ended the Soviet Union. | en | /public/assets/BI/US/favicons/apple-touch-icon-192x192.png?v=2023-11 | Business Insider | https://www.businessinsider.com/russia-ruble-crisis-looks-like-the-soviet-union-2014-12 | It's raising memories of previous collapses in Russia, like the 1998 financial crisis. But for some, it's more like the 1980s oil glut that eventually brought down the Soviet Union.
Here's Yegor Gaidar writing for the American Enterprise Institute seven years ago. He was Russia's acting prime minister between 1991 and 1994, years of extreme economic pain for Russia.
He describes the starting point of the USSR's collapse:
The timeline of the collapse of the Soviet Union can be traced to September 13, 1985. On this date, Sheikh Ahmed Zaki Yamani, the minister of oil of Saudi Arabia, declared that the monarchy had decided to alter its oil policy radically. The Saudis stopped protecting oil prices, and Saudi Arabia quickly regained its share in the world market. During the next six months, oil production in Saudi Arabia increased fourfold, while oil prices collapsed by approximately the same amount in real terms.
Sound familiar?
It should. OPEC, the group of oil-producing nations, failed to agree to a cut in output (the usual response to falling prices) this November. Statements from the Saudi oil minister and other officials have suggested that the country, and the other gulf states, are happy to let prices slide. That leaves countries like Russia in a perilous position.
In the late 1980s, the Soviet Union was forced into an embarrassing scramble for money. It tried to make deals with numerous banks, but the funding offered was far smaller than what the country required. Food shortages worsened, and Moscow needed the help of governments in the West, for which the USSR effectively had to allow Eastern European countries to assert independence.
Writing in 2007, Gaidar warned against the consensus that oil prices would stay high:
What lessons can we learn from the Soviet collapse and apply to the current situation in Russia? First, we must remember that Russia today is an oil-dependent economy. No one can accurately predict the fluctuations of oil prices. The collapse of the Soviet Union should serve as a lesson to those who construct policy based on the assumption that oil prices will remain perpetually high. It would seem that in our country, which has lived through the collapse of the late 1980s and early 1990s, this fact would be evident. But as soon as the prices went up again at the beginning of 2000 and in 2004 became comparable in real terms to those at the beginning of the 1980s, the idea that “high oil revenues are forever” has gained an even wider acceptance.
Russia today isn't the same top-down, command-and-control economy that it was in the 1980s, but the dynamic hasn't changed entirely. The country is still hugely dependent on oil, particularly in terms of tax revenues and exports.
And Gaidar thinks the collapse of the Soviet Union is still relevant for modern Russia:
One more lesson that is relevant for Russian politics today is that authoritarian regimes, although displaying a façade of strength, are fragile in crisis. In conditions of relative stability, society is prepared to tolerate the lack of real elections. People are prepared to come to terms with this situation as an inevitable and habitual evil. But they will do so only until the country encounters a serious challenge, requiring decisive and tough measures in order to adapt to unfavourable conditions.
Russian banks are watching their share prices go through the floor Tuesday. The Soviet Union may be over, but the falling oil price still poses a debt challenge for Russia. This time, its banks are more likely to take the heat. | ||
9245 | dbpedia | 1 | 34 | https://www.atlanticcouncil.org/blogs/new-atlanticist/russia-and-china-have-been-teaming-up-to-reduce-reliance-on-the-dollar-heres-how-its-going/ | en | Russia and China have been teaming up to reduce reliance on the dollar. Here's how it's going. | [
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"dmalloy"
] | 2023-02-22T17:06:01+00:00 | Squeezed by sanctions, Russia has turned to Chinese yuan and gold, but both introduced new vulnerabilities and inconveniences. | en | Atlantic Council | https://www.atlanticcouncil.org/blogs/new-atlanticist/russia-and-china-have-been-teaming-up-to-reduce-reliance-on-the-dollar-heres-how-its-going/ | Just days before Russia’s brutal invasion of Ukraine began in 2022, we warned that Russia and China’s collaboration on dedollarization—the process of reducing an economy’s reliance on the US dollar for international trade and finance—would not sanction-proof Russia’s economy. And it did not. As a result of unprecedented Western sanctions, Moscow overnight became unable to transact in dollars and euros—the world’s dominant currencies.
Russia has since pursued alternatives to manage its trade and reserves. Chinese yuan and gold became the stars of the show, but both introduced new vulnerabilities and inconveniences. Yuan makes Russia dependent on Beijing’s goodwill, while gold is not as sanctions-proof as Moscow expected, and Russia has had a hard time scaling up its illicit gold trade.
Yuanization creates new vulnerabilities
In February 2022, heavily sanctioned and isolated, Russia had to find an alternative to dollar-denominated transactions. The new currency needed two characteristics: It had to be relatively stable and minted by a non-sanctioning country. Of the few eligible options, such as the Indian rupee and South African rand, China’s yuan was the only one actively seeking an international role and able to take it on.
Moscow has rapidly intensified its use of yuan in two main ways: increasing the yuan’s share in Russia’s reserves and switching to direct ruble-yuan trade instead of using the dollar as an intermediary. At the end of last year, Russia’s Finance Ministry increased the permitted share of yuan reserves in the National Wealth Fund to 60 percent. Meanwhile, ruble-yuan trade increased eighty-fold from February to October 2022. With each of these actions, Russia created new vulnerabilities and cemented itself as the little brother in the relationship.
Ruble-yuan exchange rate vulnerability. China is Russia’s top trade partner, and its tight control of the yuan-ruble exchange rate creates risks for Russia’s balance of trade. A tightly controlled yuan may inherently seem more stable than a floating dollar, but Chinese authorities have managed the ruble-yuan exchange rate to its advantage before. Specifically, shortly after the invasion began, the Chinese government relaxed yuan controls to allow the rapidly depreciating ruble to fall faster, thus avoiding subsidizing Chinese goods for Russians by giving them more yuan than their rubles were really worth. As a result, it became much more expensive for Russia to buy Chinese goods. In other words, China could choose at any time—for political reasons or otherwise—to make Chinese imports really expensive and Russian exports to China much cheaper.
Chinese bond liquidation risk. The Russian Central Bank might not be able to sell Chinese bonds and convert the proceeds to rubles if Beijing decides to impose restrictions on yuan outflows. The liquidity risk of Chinese bonds is one of the main reasons why central banks around the world avoid purchasing them. In March 2022, the Russian Central Bank and National Wealth Fund were estimated to own 140 billion dollars’ worth of yuan-denominated assets, money that could be not be obtained by Moscow if Beijing decides to impose capital controls.
Currency swap lines elimination risk. Russia is vulnerable to Beijing’s political will when it comes to currency swap lines—an agreement between two central banks to exchange currencies. Moscow has used bilateral swap lines with the Chinese Central Bank to build up its yuan reserves. In 2014, Russia made a three-year currency swap deal worth 150 billion yuan and renewed it for another three years in 2017. In January, the Russian and Chinese central banks agreed to set up a new yuan currency swap instrument. However, such agreements expose Chinese financial institutions to US secondary sanctions for helping Russia’s sanctions evasion efforts. If Beijing determines that the threat of secondary sanctions is becoming substantial, it will soon abandon the swap lines with Russia.
Last year saw Russia take the first major steps toward the yuanization of its economy, a necessity for Moscow that in turn is increasing Beijing’s clout in international finance. While the yuan helped Russia weather the effects of sanctions in the short term, it also opened a Pandora’s box of new vulnerabilities for Moscow. For as long as sanctions remain in place, Russia will have to stay on the right side of Beijing.
Is Russia turning to gold-digging?
Moscow has been looking for alternatives to the euro and dollar since its first invasion of Ukraine in 2014. Its gold holdings, for example, have nearly tripled since 2014. Moscow is currently sitting on 150,000 gold bars valued at about $140 billion, mostly stacked in Russian vaults out of reach of Western asset freezes.
Russia is also the world’s second largest gold producer, and miners are keen to sell excess gold in international markets. Beijing has been an enthusiastic buyer. Russia is reportedly selling gold to China at a discount of up to 30 percent, and gold transfers from Russia to China increased by 67 percent in 2022.
Nevertheless, we haven’t so far observed a global mass sell-off of Russian reserve gold for four reasons.
Legal trade of Russian gold has been mostly blocked off.
Illicitly transporting 150,000 gold bars is a logistical nightmare.
Moscow has not yet felt an intense need for financing due to its energy export windfall in 2022.
Most critically, Russia will struggle to find willing and able partners to scale this illicit trade. Fellow sanctioned countries, the likes of Iran, Venezuela, and Myanmar, are deprived of dollars and euros themselves. Other gold hubs such as China, India, and the United Arab Emirates (UAE) are not interested in mass purchases due to the heightened risk of exposure and Western retaliation.
Formal channels cut off. The London Bullion Market Association’s decision to suspend all Russian refineries from its accredited list in March 2022 and a gold import ban by Group of Seven (G7) countries in June 2022 meant that Russian gold’s traditional sales routes to the United States and Europe were cut off. Russia also cannot use gold as collateral for loans or for location swaps—a transaction in which two parties agree to exchange gold they have in different locations without physically moving the gold. But no one would want to swap their non-sanctioned gold with sanctioned Russian gold. Moscow has hence turned to illicit means to liquidate its gold.
Illicit channels are also challenging. Gold’s physical nature can make it a hassle-ridden financial asset since transporting gold is more difficult than digital assets. But its advantage is its ability to be moved outside of electronic financial networks. Russia could use gold to bypass sanctions by partnering with non-Western gold hubs including China, the UAE, and India in exchange for cash or barter. Refineries are permitted to list intermediary countries as the source of unrefined gold, meaning its Russian origin is fairly easy to mask. While refined gold is inscribed with the refinery’s name and date, making it readily identifiable as Russian, it can be remelted and then resold as anything-but-Russian gold.
Recent history is replete with precedents for gold smuggling by sanctioned economies. In 2019, Russia reportedly flew Venezuelan gold around the world and exchanged it for cash dollars which were then flown back to Caracas. In 2012, Iran sold natural gas to Turkey in exchange for gold, which was then sold for cash in Dubai.
Potential partners will remain hesitant to trade a sanctioned asset in large quantities unless the risk of exposure is alleviated. But as illicit trade of other commodities between Russia and non-Western countries expands, Russian President Vladimir Putin’s shadow fleet of ships grows, and networks become entrenched, risks could be managed and more gold could clandestinely start flowing with it.
China’s global yuanization ambition
Russia and China have partnered in dedollarization since 2014. But Russia’s invasion of Ukraine and the resulting Western sanctions have created an imbalance in the urgency for dedollarization.
In addition to increasing its yuan reserves and eliminating the dollar intermediary in yuan-ruble exchange, Moscow is planning its own international standard for gold and other precious metals where prices will be fixed to members’ national currencies, likely including the yuan.
China is all too happy to assist Russia in this process. Beijing has a longer-term goal of competing with the dollar and of advancing the yuan as an international currency. Russia will be a test case as the first large economy to embrace the yuan in this way. With the power dynamic in the relationship strongly tilted in China’s favor, Russia’s urgency will permit the People’s Bank of China to experiment with financial and monetary policies in a controlled environment while easing the yuan into a more international role.
Maia Nikoladze is an assistant director for economic statecraft at the Atlantic Council’s GeoEconomics Center. Follow her on Twitter @Mai_Nikoladze.
Mrugank Bhusari is an assistant director with the GeoEconomics Center focusing on international finance and global governance. Follow him on Twitter @BhusariMrugank.
Further reading
Thu, Jun 30, 2022
Why Russia’s economy is more resilient than you might think
New Atlanticist By Josh Lipsky
With each recession, Russian institutions—and the population itself—have become increasingly inured to economic trauma.
Thu, Sep 22, 2022
The dollar has some would-be rivals. Meet the challengers.
New Atlanticist By Ananya Kumar, Josh Lipsky
What are the realistic alternatives to the dollar that US and allied policymakers should be paying attention to? And how can they respond?
Fri, Feb 18, 2022
Russia and China: Partners in Dedollarization
Econographics By Mrugank Bhusari, Maia Nikoladze
Russia has virtually stopped receiving Dollars for its exports to China. Does the US have reason to be concerned?
Image: Russian President Vladimir Putin speaks with Chinese President Xi Jinping before an extended-format meeting of heads of the Shanghai Cooperation Organization summit (SCO) member states in Samarkand, Uzbekistan September 16, 2022. Sputnik/Sergey Bobylev/Pool via REUTERS | |||||
9245 | dbpedia | 3 | 56 | https://www.cnn.com/2024/06/13/investing/us-russia-sanctions-dollar-euro-trading/index.html | en | MOEX: New US sanctions against Russia force end of dollar and euro trading on Moscow Exchange | [
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] | null | [] | 2024-06-13T00:00:00 | New US sanctions against Russia have caused an immediate suspension of trading in dollars and euros on the country’s leading financial marketplace, the Moscow Exchange. | en | /media/sites/cnn/apple-touch-icon.png | CNN | https://www.cnn.com/2024/06/13/investing/us-russia-sanctions-dollar-euro-trading/index.html | New US sanctions against Russia have caused an immediate suspension of trading in dollars and euros on the country’s leading financial marketplace, the Moscow Exchange.
The exchange, also known as MOEX, and the Russian central bank rushed out statements Wednesday, a public holiday in Russia, within an hour of Washington announcing a new round of sanctions aimed at cutting the flow of money and goods to sustain Moscow’s war in Ukraine.
“Due to the introduction of restrictive measures by the United States against the Moscow Exchange Group, exchange trading and settlements of deliverable instruments in US dollars and euros are suspended,” the central bank said.
The move means banks, companies and investors will no longer be able to trade either currency via a central exchange, which offers advantages such as better liquidity and oversight.
Instead, they will have to trade over the counter, where deals are conducted directly between two parties. The central bank said it would use data from those trades to set official exchange rates.
Many Russians hold savings in dollars or euros, mindful of periodic crises in recent decades when the ruble has crashed in value. The central bank reassured people these deposits were secure.
“Companies and individuals can continue to buy and sell US dollars and euros through Russian banks. All funds in US dollars and euros in the accounts and deposits of citizens and companies remain safe,” it said.
One person at a large, non-sanctioned Russian commodities exporter told Reuters: “We don’t care, we have yuan. Getting dollars and euros in Russia is practically impossible.”
With Moscow pursuing closer trade and political ties with Beijing, China’s yuan has ousted the dollar to become MOEX’s most traded currency, accounting for 53.6% of all foreign currency traded in May.
Dollar-ruble trading volume on MOEX tends to be around 1 billion rubles ($11 million) a day, while euro-ruble trading hovers at around 300 million rubles ($3 million) daily. For yuan-ruble trading, daily volumes now regularly top 8 billion rubles ($90 million).
Dollar rates jump
On the eve of the national holiday, the ruble closed at 89.10 to the dollar and at 95.62 against the euro. Following the sanctions news, some banks immediately jacked up their dollar rates.
Norvik Bank said Wednesday that it was offering to buy dollars for just 50 rubles but sell for 200 rubles, though it later adjusted the rates to 88.20/97.80. Tsifra Bank was buying dollars at 89 rubles and selling at 120.
The US Treasury said it was “targeting the architecture of Russia’s financial system, which has been reoriented to facilitate investment into its defense industry and acquisition of goods needed to further its aggression against Ukraine.”
Russia’s central bank has been bracing for such sanctions for around two years. In July 2022, the bank said it was modeling various sanctions scenarios with foreign exchange market participants and infrastructure organizations.
“This is bad but expected news,” Russian broker T-Investments said on Telegram.
Forbes Russia had reported in 2022 that the central bank was discussing a mechanism for managing the ruble-dollar exchange rate should exchange trading be halted in the event of sanctions against MOEX and its National Clearing Centre, which was also hit by the new sanctions.
MOEX said share trading and money market trades settled in dollars and euros would also cease. The money market comprises low-risk, short-term debt instruments like government bonds and commercial debt. | ||||
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] | null | [
"Eswar S. Prasad",
"Harold James",
"Natasha Piano",
"Daniel G. König",
"Kornel Chang"
] | null | A new history shows that, despite Marxism’s rejection of money, the ruble was critical to the Soviet Union’s promise of shared prosperity for its citizens.In spite of Karl Marx’s proclamation that money would become obsolete under Communism, the ruble rem... | en | https://www.hup.harvard.edu/favicon.ico | Harvard University Press | https://www.hup.harvard.edu/books/9780674251649 | In spite of Karl Marx’s proclamation that money would become obsolete under Communism, the ruble remained a key feature of Soviet life. In fact, although Western economists typically concluded that money ultimately played a limited role in the Soviet Union, Kristy Ironside argues that money was both more important and more powerful than most histories have recognized. After the Second World War, money was resurrected as an essential tool of Soviet governance. Certainly, its importance was not lost on Soviet leaders, despite official Communist Party dogma. Money, Ironside demonstrates, mediated the relationship between the Soviet state and its citizens and was at the center of both the government’s and the people’s visions for the maturing Communist project. A strong ruble—one that held real value in workers’ hands and served as an effective labor incentive—was seen as essential to the economic growth that would rebuild society and realize Communism’s promised future of abundance.
Ironside shows how Soviet citizens turned to the state to remedy the damage that the ravages of the Second World War had inflicted upon their household economies. From the late 1940s through the early 1960s, progress toward Communism was increasingly measured by the health of its citizens’ personal finances, such as greater purchasing power, higher wages, better pensions, and growing savings. However, the increasing importance of money in Soviet life did not necessarily correlate to improved living standards for Soviet citizens. The Soviet government’s achievements in “raising the people’s material welfare” continued to lag behind the West’s advances during a period of unprecedented affluence. These factors combined to undermine popular support for Soviet power and confidence in the Communist project. | ||||
9245 | dbpedia | 1 | 18 | https://www.npr.org/2022/04/01/1090312774/when-bricks-were-rubles | en | Following the collapse of the USSR, a new Russian bartering system was born : Planet Money : NPR | [
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""
] | null | [
"Dave Blanchard",
"Kenny Malone"
] | 2022-04-01T00:00:00 | For a brief, strange period after the U.S.S.R. collapsed, "real" money was less valuable than tradeable objects like bricks or towels. We look back at the Russian barter economy and we see the nature of money and value underneath all currency. | Subscribe to our weekly newsletter here. | en | NPR | https://www.npr.org/2022/04/01/1090312774/when-bricks-were-rubles | When the USSR collapsed, the ruble tanked and items like bricks became a more desirable form of payment. The post-Soviet economy became a laboratory for curious experiments in money. A barter economy briefly emerged. Then a gas-backed currency. All this in less than 10 years.
Today, what this strange, short period in Russia's history can teach us about all currencies, and about what makes an economy and its money valuable.
Music: "New Pulse" "A Dream of Bronze" and "Tailwind."
Find us: Twitter / Facebook / Instagram / TikTok
Subscribe to our show on Apple Podcasts, Spotify; and NPR One. | |||||
9245 | dbpedia | 0 | 42 | https://www.xe.com/currency/rub-russian-ruble/ | en | RUB - Russian Ruble rates, news, and tools | [
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""
] | null | [] | null | Get Russian Ruble rates, news, and facts. Also available are services like cheap money transfers, a currency data API, and more. | en | /apple-touch-icon.png | https://www.xe.com/currency/rub-russian-ruble/ | Years Description of the Ruble First ruble 1500s-1921
The ruble remained the official currency of Russia until 1921, when it dramatically fell in value
In 1710, the ruble was given its first subdivision, kopeks, with 100 kopeks making up one ruble
Used a bimetallic standard of gold and silver
In 1885, a new standard was adopted and the ruble was pegged to the French franc at a rate of 1 ruble to 4 francs
Second ruble 1921-1922
A redenomination was set at a rate of 1 new to 10,000 old rubles
Chervonets were also used starting in 1922
Third ruble 1923-1924
The Soviet Union issued a redenomination at a rate of 1 new to 100 old rubles
Fourth ruble 1924-1947
Known as the gold ruble, the fourth version was issued at a rate of 50 000 old to 1 new ruble
Fifth ruble 1947-1961
Following World War II, another redenomination was set at a rate of 10 old to 1 new ruble
Sixth ruble 1961-1997
Based on the 1947 reform, another redenomination was set
After the collapse of the Soviet Union, Russia continued to use the ruble, replacing old banknotes | |||||
9245 | dbpedia | 3 | 17 | https://www.dallasfed.org/research/economics/2023/1010 | en | Russian ruble buckles under trade sanctions, declining export earnings | [
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"Dallas",
"Federal Reserve",
"ruble",
"dollar",
"exports",
"Russia",
"trade",
"oil"
] | null | [] | null | Russia’s currency is losing value, falling 40 percent against the U.S. dollar since December 2022. With measures targeting Russian exports likely to persist, the country’s balance of payments will remain under pressure, leading to continuing currency weakness. | en | /~/media/images/img/apple-touch-icon.png | https://www.dallasfed.org/research/economics/2023/1010 | J. Scott Davis and Kunal Patel
Russia’s currency is losing value, falling 40 percent against the U.S. dollar since December 2022. To stabilize the currency, the Russian central bank held an emergency meeting in August and raised interest rates from 7.5 percent to 11 percent.
The move is reminiscent of Russia’s 1,150 basis-point (11.5 percentage-point) policy rate increase in response to Western financial sanctions after its Ukraine invasion. However, the current currency malaise is different. This time, the ruble’s decline is attributable to trade sanctions and plunging export earnings rather than sanctions affecting the central bank and individual financial institutions.
Initial impact of sanctions appears fleeting
The Group of Seven and its allies imposed harsh financial and economic sanctions on Russia beginning in late February 2022, following the invasion. Severe limits were placed on a number of Russian banks, and most foreign exchange reserve assets of the Russian central bank were frozen.
The moves aimed to collapse the Russian currency, making it hard to finance and conduct the war. Initially, in early March, this appeared to work. But the Russian central bank reacted, sharply boosting its policy rate and imposing strict capital controls to limit capital outflows. The response prevented the ruble’s collapse.
In May 2022, we concluded that the combination of Western financial sanctions and Russian capital controls stabilized the currency by effectively shutting down a large portion of the capital and financial account. In balance-of-payments accounting, a country’s net receipts of capital can be divided into a current account (the trade balance plus net income from overseas investment) and the capital and financial account (net receipts due to purchase and sale of foreign assets).
A positive current account—a trade surplus—puts upward pressure on the value of a currency as more capital flows into a country than flows out. Similarly, net purchases of a country’s assets put upward pressure on the value of the currency.
On the eve of the Ukraine invasion, Russia had a large trade surplus, and net capital flows into Russia through the capital and financial account were negative, that is, investment capital was flowing out. Taken together, the trade account put upward pressure on the value of the currency, while net foreign purchases of overseas assets applied downward pressure.
The combination of Western sanctions and central bank capital controls removed this downward pressure, and the Russian currency appreciated. As Chart 1 shows, after the immediate depreciation following the invasion, the Russian currency appreciated, and by the summer of 2022, the ruble traded well above prewar levels.
Downloadable chart | Chart data
In our previous article in 2022, we concluded that as long as the Russian trade surplus held, the Russian currency had found a new, stable equilibrium. This continued to be the case until December 2022, when the ruble’s value steadily declined, falling 40 percent through mid-September 2023.
Why did the stable equilibrium with a strong trade balance fall apart? Chart 2 plots Russian goods exports and imports. The chart, which begins in 2013, shows that Russia has run a strong trade surplus, but this surplus has fallen over the 18 months since the invasion.
Downloadable chart | Chart data
There has been a discrepancy in Russian trade data since February 2022. The chart plots exports and imports from two sources, International Monetary Fund Direction of Trade statistics and the Russian central bank. Before 2022, these two series were nearly identical, but after the invasion, a gap opened between the two. Explaining that discrepancy is beyond the scope of this article, but importantly, the trade surplus has been this low only twice over the past decade—during the COVID-19 crisis of early 2020 and in January 2016.
Declining value of energy exports drives overall exports lower
Crude oil, petroleum products, natural gas and liquefied natural gas (LNG) made up nearly half of all Russian exports in 2021. Crude oil and petroleum products alone totaled 36.6 percent of total exports ($181 billion); natural gas accounted for 12.7 percent of exports ($63 billion). Russia was the second-largest producer of crude oil and natural gas globally behind the United States by year-end 2021.
Interestingly, previous episodes of low Russian trade surpluses, in 2016 and 2020, occurred when the price of Brent crude fell below $30 a barrel (Chart 3). Brent crude, the North Sea benchmark, now trades above $80. The chart also shows that before the invasion, the price of Russian oil, Urals crude, was nearly identical to the price of Brent.
Downloadable chart | Chart data
Since the invasion, Russian oil on a cost, insurance and freight (CIF) basis has traded at a discount to Brent of around $20 to $30 per barrel. The free on board (FOB) price discount is larger at Russian loading ports, as that excludes insurance and freight. So even though Brent crude trades above $80 per barrel, the price Russia receives for its oil is much less.
Sanctions help explain lower Russia oil receipts
The European Union (EU) countries, along with the U.S., the U.K. and some Asian nations, sharply curtailed their Russian oil imports following the invasion. The U.S. and the U.K. placed embargoes on Russian oil early in 2022, and the EU imposed an oil embargo and a price cap in December 2022. The result has been a dramatic shift in the buyers for Russian oil (Chart 4).
Downloadable chart | Chart data
Before the invasion, almost 5 million barrels per day of Russian crude oil and oil products went to the EU, the U.S., the U.K. and the Asian members of the Organization for Economic Cooperation and Development. This represented over 60 percent of Russia’s total oil exports. Now 0.7 million barrels per day go to those countries, or less than 10 percent.
However, the total quantity of Russia’s oil exports has remained fairly stable, as China, India and other emerging markets buy the embargoed oil that once went to Western countries. Federal Reserve Bank of Dallas research earlier this year explained how this trade diversion helped ease the embargo’s impact on Russia.
Ongoing research supports the view that the limited number of potential buyers for Russian crude and refined products increased their bargaining power, allowing purchasers to demand greater discounts to the global market as early as March 2022.
Because of the embargo, Russian petroleum exports must travel significantly longer distances to the new buyers than to the Western buyers, driving up shipping costs. The price cap, instituted in December 2022 for crude oil and in February 2023 for petroleum products, allowed Western companies to continue insuring shipments as long as they did not exceed a maximum price.
While trade diversion didn’t much affect the volume, the pricing discounts led to a decline in the value of Russian petroleum exports. The International Energy Agency estimates Russia’s export revenue from crude and refined products fell 30 percent from the first half of 2022 to the first half of 2023, while volumes were largely stable.
Russia’s natural gas export volume, price decline
The other side of Russia’s energy export mix is natural gas. Before the Ukraine invasion, 84 percent of Russia’s exported natural gas was transported via pipelines, and the remaining 16 percent was LNG. Increased European LNG imports from non-Russian sources, warmer winter weather and European energy conservation measures contributed to sharply lower natural gas demand over the past year. The European price fell from $48 per million British thermal units (MMBtu) during the second half of 2022 to $14 per MMBtu during the first half of 2023.
Slightly more than 80 percent of piped natural gas from Russia went to Europe in 2021. The volume of Russian gas through German, Polish and Ukrainian pipelines to Europe declined by roughly 90 percent from 2021 to the first half of 2023. In the short run, there are few alternative outlets for selling piped gas.
Liquefaction facilities or new pipelines to move gas to new, non-European customers take time to construct. Plus, piped gas that would have been sold to Europe before the invasion is now probably not exported at all. While there are no official estimates regarding the value of Russian natural gas exports for 2022 and 2023, it is likely that lower prices coupled with lower export volumes amounted to a decline in the value of natural gas exports from the first half of 2022 to the first half of 2023.
Price discounts for crude oil will likely persist because of the bifurcation of buyers and the extended distance exports must travel to their destination. Piped gas volumes to Europe continue to remain low. While Russia aims to increase exports of natural gas to China, it will take many years to build new pipelines.
With measures targeting Russian exports likely to persist, the country’s balance of payments will remain under pressure, leading to continuing currency weakness. | |||||
9245 | dbpedia | 0 | 15 | https://corporatefinanceinstitute.com/resources/foreign-exchange/russian-ruble-rub/ | en | Russian Ruble (RUB) | [
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] | 2023-10-13T13:46:20+00:00 | The Russian Ruble refers to Russia’s currency. Coming into use in the 14th century, the ruble is the second oldest currency after the Sterling | en | //cdn.corporatefinanceinstitute.com/assets/cfi-favicon-3-150x150.png | Corporate Finance Institute | https://corporatefinanceinstitute.com/resources/foreign-exchange/russian-ruble-rub/ | What is the Russian Ruble (RUB)?
The Russian Ruble refers to Russia’s currency. Coming into use in the 14th century, the ruble is the second oldest currency after the Sterling Pound. In 1704, it became the first European currency to be decimalized, when the ruble was equivalent to 100 kopeks.
Russian ruble notes are printed in Moscow’s state-owned factory, which began its operations at the end of World War I. Coins are minted in both Moscow and the almost 300-year-old St. Petersburg Mint. While there is no official symbol, py6 (three Cyrillic characters equal to RUB in Russian) is currently used to represent the Russian ruble.
History of the Russian Ruble
The history of the ruble dates back to 1704, when the coin was standardized to 28 grams of silver during the rule of Peter the Great. A new standard was implemented on December 17, 1885, which did not affect the silver ruble but lowered the gold content to 1161 grams. Later, during the rule of Nicholas I, the silver ruble was declared a monetary unit and a principal instrument of payment, and banknotes became a payment support instrument.
Although the ruble went through innovations, reforms, and trials, the value remained intact until 1971. The design of the Russian currency changed in 1991 during the Soviet Union’s dissolution. The Central Bank of the Soviet Union placed into circulation new notes and coins. The Bank of Russia also issued Russian ruble banknotes in denominations 5,000 and 10,000. There was a new reform in 1993, which along with the new notes issued, aimed to bring an end to the circulation of Soviet versions.
Current Russian Ruble
A new 10-ruble coin made of brass-plated steel, incorporating optical security features, was issued in October 2009. The 10-ruble banknote would’ve been discontinued in 2012, but a lack of 10-ruble coins forced the central bank to pause this and bring new coins into circulation. Bimetallic commemorative coins of 10 rubles will continue to be issued.
A collection of circulated Olympic memorial coins of 25 rubles made of cupronickel began in 2011. Many small special edition coin denominations remain in circulation, representing national historic occasions and anniversaries.
In 2017, the Central Bank of Russia launched two new banknotes – 200 RUB and 2,000 RUB. A vote was held in September 2016 to determine the icons and cities to be shown on the new notes. Russian Internet users selected the symbols through an online poll conducted by the Bank of Russia. The Russian Central Bank unveiled the new icons in February 2017.
Russian Ruble and International Trade
On November 23, 2010, Russian President Vladimir Putin and the then-Prime Minister of China, Wen Jiabao, declared that Russia and China would use their currencies instead of USD for bilateral trade. The goal was to further strengthen relations between Moscow and Beijing and secure their local economies during the economic crisis.
In January 2014, Putin stated that the forex rate for ruble should be well balanced. Also, that the national exchange rate would only be controlled by the central bank as it went above the upper or lower bounds of the floating forex rate; and that the more open the Russian national currency, the better and that it would help the country’s economy to respond in a more effective and timely manner.
Though Russia is one of the largest exporters of oil, its currency is not strongly correlated with oil prices due to continuing political uncertainty in Russia.
Additional Resources
CFI is the official provider of the Commercial Banking & Credit Analyst (CBCA)™ certification program, designed to transform anyone into a world-class financial analyst.
In order to help you become a world-class financial analyst and advance your career to your fullest potential, these additional resources will be very helpful: | ||||
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] | null | [] | null | null | Cash — banknotes and coins — has the functions of currency and means of payment.
Pursuant to Article 75 of the Constitution of the Russian Federation, the Russian currency unit is the ruble. The Bank of Russia is the sole issuer of currency. The introduction and issue of another currency are prohibited in the Russian Federation.
Despite the rapid growth of cashless payments, cash money, i.e., banknotes and coins, remains an important part of the financial system and an important part of national identity and culture.
The Bank of Russia issues commemorative coins dedicated to significant dates, to Russian scientists, artists and cultural figures, to Russian regions, and to many other subjects. | ||||||||
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] | null | [] | null | Convert Russian ruble - RUB to Major World Currencies with Wise Currency Converter | en | Wise | https://wise.com/us/currency-converter/currencies/rub-russian-ruble | Russian Ruble (RUB)
The Russian rouble (or ‘rouble’) is the official currency of Russia. Its currency code is RUB and its symbol is ₽. You’ll see it written in Russian as рубль or ‘rubl’ and its plural as рубли́ or ‘rubli’). The rouble is fiat money, and was the world’s first decimal currency. Its currency conversion factor has 6 digits.
© Wise US Inc 2024
Wise is a Money Service Business registered with FinCen. It is authorized to operate in . In other states, the program is sponsored by Community Federal Savings Bank, to which we’re a service provider. | |||||
9245 | dbpedia | 1 | 52 | https://www.travelex.com.au/buy-currency/rub-russian-ruble | en | Buy Russian Ruble (RUB) Our Best Exchange Rate | [
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] | null | [] | null | Buy RUB (Russian Rubles) with Travelex and exchange AUD at our best online rates. Buy a travel money card with home delivery or collect in-store. | en | https://www.travelex.com.au/buy-currency/rub-russian-ruble | The ruble fell on tough times recently with thanks to the 2014-2016 Russian financial crisis and the economic sanctions placed on the country due to recent territorial disputes.
However more recently, the ruble has proven a robust investment choice for emerging markets, due to the country’s high interest rates and struggling economies proving a worth competitor.
Banknotes are available in 5, 10, 50, 100, 500, 1,000 and 5,000 ₽, with coins available in 10 and 50 kon. 1, 2, 5 and 10 ₽.
* Rates are subject to change throughout the day. In-store rates vary compared to online.
** The figures provided are indicative only and are there to provide an idea of the amount of travel money you may need during your trip.
*** Business days. Some stores open 7 days. The next available date will be displayed when ordering.
^^Based on mid-market and Travelex Online AUD to FX exchange rates as of the date of the relevant social media post and/or email communication. Rates are subject to change throughout the day. Any rates and savings are quoted as a guide only.
Travelex Limited (ABN 36 004 179 953, AFSL Number 222444) arranges for and sells Online Foreign Currency via its Online Ordering Facility. You should consider the Terms and Conditions before deciding whether to acquire any product.
Mastercard Prepaid Management Services Australia Pty Ltd (ABN 47 145 452 044, AFSL 386 837) arranges for the issue of the Travelex Money Card in conjunction with the issuer, EML Payment Solutions Limited (‘EML’)(ABN 30 131 436 532, AFSL 404131). You should consider the Product Disclosure Statement for the relevant Travelex Money Card and Target Market Determination available at www.travelex.com.au, before deciding to acquire the product. Any advice does not take into account your personal needs, financial circumstances or objectives and you should consider if it is appropriate for you. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. | ||||||
9245 | dbpedia | 0 | 49 | https://www.nytimes.com/2023/08/10/business/russia-economy-ruble-inflation.html | en | Russia Tries to Bolster Ruble as Inflation Adds to Economic Woes | [
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] | null | [
"Paul Sonne"
] | 2023-08-10T00:00:00 | The central bank in Moscow took steps to counter the currency’s slide, but the war and resulting sanctions have put intense pressure on the economy. | en | /vi-assets/static-assets/favicon-d2483f10ef688e6f89e23806b9700298.ico | https://www.nytimes.com/2023/08/10/business/russia-economy-ruble-inflation.html | After Russia’s ruble hit a 16-month low against the U.S. dollar, raising fears of rising inflation, even one of President Vladimir V. Putin’s top cheerleaders in state media lashed out at the country’s financial authorities on Thursday over an exchange rate that he said was a subject of global mockery.
The Russian central bank took measures on Thursday to stabilize the currency, amid the latest squall of financial volatility unleashed by Mr. Putin’s war against Ukraine. This time, the challenges are seen in both a struggling ruble that is fueling inflation, but also in government budget deficits that raise concerns about the sustainability of Russia’s intense spending on the war.
The weakening ruble neared an exchange rate of 100 per U.S. dollar earlier this week, down by roughly 25 percent since the start of the year. The decline prompted the Bank of Russia on Thursday to halt purchases of foreign currency for the remainder of the year “to reduce volatility.”
The central bank’s move should help shore up the ruble, because when the bank spends rubles to buy foreign currency, it increases the supply of rubles in circulation, lowering their value. The ruble was roughly flat in trading on Thursday.
But the events demonstrate how Russia’s dramatically changing economy is challenging Moscow’s financial policymakers, who have nimbly reacted to wartime shocks but still face longer-term dilemmas. Yawning deficits, coupled with exports that are increasingly crimped by sanctions, have disrupted Russia’s economic equilibrium.
The central bank has forecast inflation between 5 and 6.5 percent this year. Official data released on Wednesday showed the annual rate of inflation accelerating to 4.3 percent in July.
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""
] | null | [] | null | The primary objectives of the Central Bank are to ensure price stability and financial stability. | en | /_layouts/images/favicon.ico | null | ABOUT THE CBA
History
Money circulation in Soviet period
In 1924, the coins were put into circulation in the territory of the Soviet Union. These were of 1, 2, 3 and 5 kopeck denomination in copper; 10, 15, 20 kopeck in base-alloy silver; and 50 kopeck and 1 ruble in silver. Copper coin of the smallest nominal value, the half-kopeck, was issued in 1925-1928.
Starting from 1926, the coins of 1, 2, 3 and 5 kopeck denomination were made of bronze; starting from 1931, the coins of 10, 15 and 20 kopeck denomination were made of copper-nickel alloy.
There were various issues of the USSR banknotes. They originated in 1923 and followed one another in a short period. Both monetary units “ruble” and “chervonets” (1 chervonets was worth 10 ruble) were issued and put into circulation. In 1937, on the occasion of the 20th anniversary of October revolution, for the first time V. Lenin was portrayed on the series of chervonets.
A monetary reform was passed in 1947 with a key objective to promote a quick recovery of the war-suffered economy, and a new series of banknotes of 1, 3, 5, 10, 25, 50 and 100 ruble denomination was issued.
Pic. 1. USSR, banknote of 5 ruble denomination, 1947
In 1961 denomination of currency was implemented (proportion 10:1), and a new series of coins of 1, 2, 3, 5, 10, 15, 20, 50 kopeck and 1 ruble denomination was put into circulation. The series of banknotes consisted of 1, 3, 5, 10, 25, 50 and 100 ruble denomination.
Pic. 2. USSR, banknote of 3 ruble denomination, 1961
Pic. 3. USSR, banknote of 25 ruble denomination, 1961
In 1991, to regulate money circulation, the banknotes of 50 and 100 ruble denomination were withdrawn from circulation and substituted by new ones. Later on, the banknotes of the 1991 series in nominal value 1, 3, 5, 10, 200, 500 and 1000 ruble were put into circulation.
Since January 1992, prices were liberalized, which led to price increases and devaluation of the ruble. The banknotes of 1992 series of 50, 200, 500, 1000, 5000 and 10000 ruble denomination were put into circulation.
More information related to the materials of this Section can be found from literature available in the Library of the Central Bank of Armenia:
Y. T. Nercessian, Bank Notes of Armenia, Armenian Numismatic Society, Los Angeles, 1988
П.Ф. Рябченко, Полный каталог бумажных денежных знаков и бон России, СССР, стран СНГ (1769-1994 гг.), Издательско-культурологический центр “София”, Киев, 1995
R. Vardanyan, G. Mughalyan, A. Vardanyan, A. Zohrabyan, H. Hovhannisyan, The History of Money Circulation of Armenia, Central Bank of the Republic of Armenia, Yerevan, 2018
А. Р. Тевотросян, Бумажные денежные знаки Армении, Авторское издание, Ереван, 2020 | ||||||
9245 | dbpedia | 2 | 50 | https://history.stackexchange.com/questions/60772/why-did-the-ussr-have-two-sources-of-currency | en | Why did the USSR have two sources of currency? | [
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""
] | null | [] | 2020-08-17T23:20:38 | An inscription on the 1, 3, and 5 rubles notes says that it is a State Treasury Note (Государственный Казначейский Билет), and that it is guaranteed by the entire property of the Union of SSR ( | en | https://cdn.sstatic.net/Sites/history/Img/favicon.ico?v=c55b54740769 | History Stack Exchange | https://history.stackexchange.com/questions/60772/why-did-the-ussr-have-two-sources-of-currency | In 1922, the Soviet economy was suffering from high inflation and the government introduced a new gold-backed currency called Chervonets which was equivalent of the old Russian imperial gold coin of 10 roubles. Initially, chervonets was exchanged for 11,400 roubles. As the roubles and chervonets were both in circulation, every day, the State Bank published exchange rate between roubles and chervonets.
The same year, the State Bank started issuing banknotes denominated in chervonets which had inscription that 1 chervonets is equivalent of 7,74234 grams of gold. Chervonets was freely convertible and was traded on foreign exchanges.
By the end of 1923, chervonets mostly replaced old Soviet roubles and comprised 80% of the money supply. In 1924, the Soviet government started also issuing State Treasury Notes in denominates of 1,3 and 5 gold roubles (1 chervonets equals 10 gold roubles) but they weren't gold-backed. In 1925, the rouble was pegged to the chervonets with the same rate of 1 chervonets to 10 roubles.
With the end of New Economic Policy, increasing money supply, introduction of price controls, chervonets started losing its convertibility and in 1930 stopped being traded on foreign exchanges. In 1937, new banknotes for 1,3,5,10 chervonets had new inscription which didn't mention its gold equivalent but still stated that they are "guaranteed by gold, precious metals, and by other assets of the State Bank". In 1947, the State Bank issued new banknotes in denominations of 10,25,50 and 100 roubles. The dominations of 1,3 and 5 roubles were still issued as Treasury notes. The last Soviet banknotes were issued in 1961 with the same distinction between "State Bank Note" for denominations of 10,25,50 and 100 roubles and "State Treasury Note" for denominations of 1,3 and 5 roubles but with no real distinction in practice.
Your State Treasury Note is similar to the German Rentenmark, which was based on mortgaged public property up to a sum of 3.2 Billion Goldmarks.
The State Bank Note was similar to the German Reichsmark, which was, theoretically, pegged to gold/US dollar.
In theory an inflation of the Reichsmark would not effect the value of the Rentenmark, since the value of the property (in Reichsmark) would automatically rise with the inflation.
The theory also assumes that the population trusts the issuing authority not to print more banknotes than the value of the mortgaged property.
The reason to retain both was the hope that the population would remain confident in the value of the State Treasury Note (Rentenmark), even if the value of the State Bank Note (Reichsmark) radically lost value.
The Soviet Rubel, togeather with the currencies of all the other Socialist countries at that time, were non-convertable currencies. They were only intended for internal usage.
In the Soviet Union, the idea was to make socialist distribution of income look more equal than it actually was. The mechanism was to create rubles of different value and pay different classes of people in different kinds of rubles.
Rubles that were tied to "hard currency" such as dollars or gold, held their value better than "Soviet" rubles that were tied to the economy of the Soviet Union. As noted in a book called "Klass", at times, the value of a "certificate" (hard currency) ruble might approximate one dollar, while it cost twenty "Soviet" rubles to buy one dollar on the black market. So the "official" exchange rate (of hard rubles) might be 1 to 1, while the "real" rate (of Soviet rubles) would be 20 to 1.
A laborer might earn 500 rubles a month while a senior party member earned 1000 rubles a month. On paper, that's a two to one ratio in favor of the party member, in line with "socialist" principles.
Except that the laborer was paid in "Soviet" rubles in worth 5 cents on the dollar, or $25 a month, while the party member was paid in "dollar" rubles worth 100 cents on the dollar, or $1000 a month. Then the party member would, in fact, earn 40 times as much as the laborer, a ratio more in line with capitalist principles.
The USSR had a continuous complex capitalist market throughout its history. (War communism was RSFSR.). This market mediated relations between various enterprises. In particular the finance and capital banks mobilised state and firm investments.
The obvious rationale behind high value notes being firm guaranteed and low value notes being state guaranteed is to allow mediating institutions (banks) to be able to fail liquidating outstanding credit notes values. In contrast low value notes are state guaranteed. This ensures that in a bank run crisis within the Soviet Union the state places a greater risk on workers and speculators and petits bourgeois and the few private bourgeois. In contrast in an inflationary crisis the state is insulated from issuing new notes as its notes rapidly become worthless.
Yes, large scale investment was centrally planned as were major markets, but these and the consumer market were mediated by market relations. | ||||
9245 | dbpedia | 1 | 13 | https://wifpr.wharton.upenn.edu/book-reviews/review-of-the-ruble-a-political-history-by-ekaterina-pravilova/ | en | Review of The Ruble: A Political History by Ekaterina Pravilova | [
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"Max Harris"
] | 2023-06-27T14:04:58+00:00 | By Alex Royt On March 8, 2022, the Central Bank of Russia (CBR) decided to stop exchanging rubles for foreign currencies. Russia’s invasion of Ukraine the previous month led to sanctions—including the freezing of a majority of CBR reserves— that had made the defense of the ruble’s exchange rate impossible,…Read More | en | https://wifpr.wharton.upenn.edu/wp-content/plugins/martech-chupacabra/includes/images/favicon.ico | Wharton Initiative on Financial Policy and Regulation | https://wifpr.wharton.upenn.edu/book-reviews/review-of-the-ruble-a-political-history-by-ekaterina-pravilova/ | By Alex Royt
On March 8, 2022, the Central Bank of Russia (CBR) decided to stop exchanging rubles for foreign currencies. Russia’s invasion of Ukraine the previous month led to sanctions—including the freezing of a majority of CBR reserves— that had made the defense of the ruble’s exchange rate impossible, with the value of the ruble dropping 30% vis-à-vis the dollar. Under the leadership of Elvira Nabiullina, the CBR introduced capital controls, including a ban on sending foreign currency abroad. These measures stabilized the domestic value of the ruble, but the war has transformed the ruble into an inconvertible currency. Inconvertibility has allowed Putin to treat the central bank as his own political tool. By directly supplying the Defense Ministry with cash, the CBR undercuts its reputation as a technocratic institution.
Yet in the context of global history, Russia has never been a bastion for central bank independence, not least because of the frequent demands of war. In fact, the formation of Russia’s first credit bank was followed by the Russo-Turkish War of 1768–1774. Then came the Napoleonic Wars under Alexander I, the Crimean War and Russo-Turkish War under Alexander II, and the Russo-Japanese War and First World War under Nicholas II. Wars have often forced Russia’s Ministry of Finance to impose (either overtly or covertly) capital controls to defend the silver or gold pegs which stabilized the ruble exchange rate in foreign and domestic markets.
Why are Russia’s autocrats able to manipulate money for their personal whims? Ekaterina Pravilova’s timely new book The Ruble: A Political History tells the story of the creation of the ruble by the Tsarist state. In a four-part work covering the period between 1750 and 1924, Pravilova argues that Tsars have always considered money a representation of their own political and economic power. The Ruble: A Political History examines how Tsars and their reformers treated Russia’s currency as a political construct. By examining the meaning of money in various reformist texts, Pravilova shows how the ruble became a material embodiment of the ever-changing Russian idea.
The author continues to forge new paths in the history of the Tsarist economy. Her pathbreaking histories, which include the untranslated yet essential Finances of Empire on the creation of the imperial budget and the prize-winning A Public Empire on the reforms governing Russia’s public property, have cemented her reputation as the leading scholar of Imperial Russian history. The Ruble constitutes another successful entry that situates Russia’s development within broader trends of European history. Pravilova contextualizes reforms so that “without implying some inherent specificity (or pathology) of the Russian state and its society, The Ruble shows how they evolved in the context of Russia’s political, financial, and intellectual relationship with the West and the East” (3).
In a careful reading of Russian archival sources, the first section of the book examines how the modernizing project of the Tsarist state came to focus on the ruble. As early as the late 18th century, liberal reformers such as Mikhail Speransky pushed for a constitution to restrict the power of the autocrat and guarantee the independence of the state bank from the treasury. Yet, from the creation of the Assignat Bank in 1768 to the Great Reforms of 1861, imperial expansion wedded the success of reforms to the whims of the autocrat. By following Russia’s Ministers of Finance, we see how wars resulted in inflation while military expenditure consumed net revenue. Secrecy was instituted regarding the emission of the paper ruble, undermining confidence in the currency’s value. This secrecy worked both ways, as the autocrat was falsely informed that the fluctuating rate of discount for Russia’s bill of exchange was caused by foreign speculators.
While liberal reformers sought to make the ruble a vehicle to constitutional reforms, nationalists consistently kept the ruble inconvertible to stifle reform. The second section alone makes the book worth the price of admission, relating how conservative nationalists saw the ruble as the embodiment of Russia’s uniqueness. This nationalist conception of money came in the form of the “imperial ruble” that, through colonial annexations, reconstituted the Russian empire into a full-fledged ruble zone. Pravilova’s regional case studies reveal how much influence the nationalists had on monetary and foreign policy, such as when monetary authorities in St. Petersburg tried to replace local currencies in Kokand and Bukhara following their annexation in 1868.
The third and fourth sections cover the collapse and resurrection of the ruble zone in the Russian Revolution. While the Minister of Finance Sergei Witte put the Russian Empire on the gold standard in 1897, he was a nationalist with little concern for the political modernization of Russia. As Pravilova notes, his incompetence in financial matters was matched by his conservative distaste for any constitutionalist agendas. Despite this, his careful manipulation of the press made him appear as a modernizer of Russian finance who shored up the State Bank’s gold reserves. The Bolsheviks were, in many ways, similar to Witte. They did not annihilate money but used it to serve their political ends of creating a socialist society. By reconstituting the Soviet Union along the lines of the Russian empire, the Bolsheviks realized the dream of conservative Russian nationalists—recreating the Soviet ruble as an imperial ruble. They even brought back the gold standard, although as a closed economy this return was quite different from the original.
Pravilova’s new book serves as a magisterial example of how political, cultural, and economic history can inform one another. It also serves as a much-needed crash course for understanding the imperial ambitions of the Russian state. Of late, the ruble’s domestic recovery has garnered praise for its chief central banker Nabiullina. While Nabiullina has succeeded in retaining her reputation, many central bankers before her have failed. They have failed precisely during Russia’s many wars.
Alex Royt is a PhD candidate in history at Penn and graduate fellow of the Business, Economic, and Financial History Project. | ||||
9245 | dbpedia | 1 | 44 | https://www.intereconomics.eu/contents/year/2022/number/3/article/sanctions-and-the-exchange-rate.html | en | Sanctions and the Exchange Rate | [
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"Oleg Itskhoki",
"Dmitry Mukhin"
] | null | A record number of economic sanctions have been imposed on the Russian economy since the invasion of Ukraine in February 2022. Given that it might take months and even years for these restrictions to take a toll on the economy, many commentators and policymakers attempt to infer the effects of sanctions from the short-term dynamics of the rouble exchange rate. In the immediate aftermath of the invasion and the imposition of sanctions, the Russian rouble quickly lost nearly half of its value (Figure 1). However, a few weeks later, the value of the rouble started to appreciate and, at the beginning of May, was higher than before the war. | en | Intereconomics | https://www.intereconomics.eu/contents/year/2022/number/3/article/sanctions-and-the-exchange-rate.html | A record number of economic sanctions have been imposed on the Russian economy since the invasion of Ukraine in February 2022. Given that it might take months and even years for these restrictions to take a toll on the economy, many commentators and policymakers attempt to infer the effects of sanctions from the short-term dynamics of the rouble exchange rate. In the immediate aftermath of the invasion and the imposition of sanctions, the Russian rouble quickly lost nearly half of its value (Figure 1). However, a few weeks later, the value of the rouble started to appreciate and, at the beginning of May, was higher than before the war.
These puzzling dynamics lead to several contradictory and misleading interpretations. Some commentators conclude that the imposed sanctions are not working. Similarly, state media in Russia uses the reversion of the exchange rate as an indicator of the resilience of the economy and the short-lived effects of sanctions. Other commentators went to a different extreme suggesting that given all the policy measures and restrictions imposed to stabilise the exchange rate, it has lost its relevance as an allocative price and has become inconsequential from the perspective of welfare.
Swings in the exchange rate
What explains the puzzling swings in the exchange rate over the last months? To answer this question, we first note that the value of the rouble is determined on the Moscow Exchange, which has become largely disconnected from international financial markets since the beginning of the war. Western sanctions constrain foreign banks from trading roubles, and Russian capital controls limit access of Russian residents to foreign markets. As a result, the local supply of foreign currency comes from export revenues and government reserves, while local demand is shaped by import expenditure, foreign liabilities of Russian firms (to the limited extent they exist despite the 2014 sanctions) and the use of foreign currency as a store of value. The equilibrium exchange rate equilibrates the local supply and demand of currency and also shifts together with monetary inflation.
In Itskhoki and Mukhin (2022b), we show that a simple equilibrium model of exchange rate determination explains well the rouble dynamics from Figure 1. The overnight freeze of a significant fraction of government foreign reserves, the exclusion of major banks and corporations from international borrowing markets, and a threat of blocking commodity exports led to a sharp depreciation of the rouble on impact. Foreign investors exited the Russian market selling assets and expatriating proceeds, which resulted in capital outflows and an associated steep demand for currency. These factors were exacerbated by a sharp increase in the home precautionary demand for foreign currency driven by a collapse in the supply of alternative vehicles for savings. Indeed, demand for home-currency deposits went down due to rising inflationary expectations and the risks in the banking system. Similarly, the increased uncertainty and the risk of sanctions made local stocks and bonds highly unattractive, resulting in a prolonged closure of the Russian financial market.
The exchange rate appreciation
The exchange rate reversed in mid-March and appreciated gradually over the next month to the pre-war level.
First, tougher sanctions on Russia’s imports than on its exports over this period led to a sizable current account surplus and an inflow of foreign currency into the economy. This created a force for the rouble appreciation to bring the currency market in equilibrium. Similarly, from the perspective of the goods market equilibrium, this appreciation force allowed for expenditure reallocation towards varieties of imported goods that were not sanctioned but were not demanded unless home currency appreciation brought down their relative prices (see also Lorenzoni and Werning, 2022).
Although no official data on country’s trade balance in this period is available yet, the anecdotal evidence suggests that the fall in imports was dramatic, with some estimates exceeding 50%. The direct restrictions on imports were amplified by difficulties with cross-border payments and shipments of foreign goods. At the same time, the inventories of foreign durables used in production and sold to final consumers allowed for a gradual adjustment in the Russian market. With the benefit of hindsight, it is clear that the fall in imports is a large enough force for the rouble appreciation even after other factors described below fade away, as Russia is likely to “enjoy” a persistent trade surplus as the result of the current mix of sanctions.
Second, with limited access to foreign reserves, the central bank used extensive financial repression, which included strict limits on foreign currency deposit withdrawals, capital outflows, and a tax on local currency conversion to dollars and euros. This severely constrained the domestic demand for foreign currency deposits as well as eliminated the effective ability to access existing currency deposits and send the stock of foreign currency savings abroad. This largely offset the initial shock of the freeze of Russian foreign reserves, which constituted the main instrument used by the Central Bank of Russia to smooth exchange rate fluctuations before the war. The aggressive use of financial repression, along with a steep increase in the home currency interest rate, proved to be an effective substitute under sanctions from the point of view of exchange rate stabilisation.
The relevance of the financial repression policy can be clearly seen in Figure 2, which exploits the heterogeneous treatment of different currencies. Specifically, on 4 March, a 12% tax was introduced on purchases of US dollars, euros and UK pounds, but not other currencies. This tax was eliminated on 11 April. For concreteness, we compare the behaviour of the US dollar exchange rate with that of the Swiss frank, which was not subject to the tax, yet is presumably as safe and therefore offers a close substitute to the dollar. In the left panel of Figure 2, we plot the US dollar exchange rate against the Swiss frank at the Moscow Exchange relative to its international value, which was identically zero before the war, and comoved closely with the tax thereafter. Indeed, the Swiss frank appreciated sharply on the Moscow Exchange (and not internationally) after the 12% tax was imposed on the dollar on 4 March and then depreciated back after the tax was eliminated on 11 April, resulting again in the convergence of the Moscow Exchange’s rate to its international value. The right panel of Figure 2 additionally shows that the turnover of Swiss francs on the Moscow Exchange increased dramatically relative to that of the dollar during the same period.
Third, the record-high commodity export revenues in the first half of 2022 allowed the Russian government to enjoy a considerable fiscal surplus, thus far avoiding the need to monetise its fiscal obligations and to induce a monetary-driven depreciation. In contrast, the steep appreciation of the rouble since mid-March now puts pressure on the government fiscal balance, as revenues are tied to foreign currency exports, while liabilities are in roubles. As a result, in late April and May, the Russian government has relaxed a number of financial repression measures on foreign currency savings and transfers to avoid excessive appreciation of the rouble.
The three factors outlined above are arguably more important in stabilising the exchange rate than conventional monetary tools such as the hike in the policy rate to 20%, which was mostly aimed at stopping a bank run on the rouble deposits and at preventing monetary inflation. Nonetheless, going forward, the prospect of export sanctions and fiscal problems driven by a domestic recession can result in both inflation and devaluation, but these prospects appear to be pushed forward at least towards the end of 2022.
Paying for exports in roubles
Another policy that attracted much attention was Putin’s decree that “unfriendly nations” pay for Russian energy exports in roubles rather than in euros or dollars. This demand faced a backlash in Europe with some countries eventually switching to the rouble and others refusing to change the settlement currency. In response, Russia halted gas exports to Poland, Bulgaria and Finland.
While the motivation for this request has never been publicly laid out, it is unlikely to be directly related to the exchange rate. Of course, as a monopolist, the Russian government could potentially sell roubles to other nations at any exchange rate. However, because oil and gas contracts specify prices in euros or dollars, the rouble exchange rate would not change the total inflows of foreign currency. Given that most import prices are also invoiced in euros and dollars (Amiti et al., 2022), the volume of imports would not change either. Thus, a change in the settlement currency would have no real effects. Instead, it is more likely that the request to use the rouble in international transactions is aimed at loosening the stance of the financial sanctions on the economy.
Sanctions did bite
The appreciation of the rouble to the pre-war level has been widely interpreted as a sign that so far sanctions have had a limited effect on the Russian economy. As mentioned above, this argument misses the fact that most restrictions were imposed on Russia’s imports, which lowered demand for foreign currency, thus creating a force for the rouble appreciation. This appreciation, however, cannot offset the increase in the effective costs of imports, particularly in view of their limited availability, or compensate the associated welfare losses and increased real costs of living.
More generally, there is no one-to-one relationship between the exchange rate and welfare, and hence the effectiveness of sanctions cannot be inferred from the exchange rate. On the one hand, sanctions on imports and exports are equivalent in terms of their effect on the consumption of foreign goods – the former increase their relative prices, while the latter lower the amount of resources available to purchase foreign goods – and thus have the same welfare implications. On the other hand, the effect on the exchange rate goes in opposite directions in the two cases – import sanctions decrease the demand for dollars and appreciate the rouble, while export sanctions lower the supply of dollars and depreciate the rouble.
Importantly, the equivalence extends to fiscal revenues: Although import restrictions have no direct effect on government income, the associated change in the exchange rate lowers nominal and real fiscal revenues in the same way as export restrictions (see Amiti et al., 2017). The fact that exports constitute an important source of government revenues does not change the result and thus cannot be used as an argument in favour of export over import sanctions. Instead, the use of export restrictions can be justified if import sanctions are considered insufficient, are limited by the trade share of sanctioning countries or minimise the costs to sanctioning countries (see Sturm, 2022).
The exchange rate still matters
Equally misleading is the common view that the policy restrictions make the exchange rate irrelevant for the economy. Despite the large interventions of the government in the foreign exchange market, including multiple restrictions on purchasing and managing foreign currency, the value of the rouble affects the economy via two channels. First, the appreciation of the exchange rate increases the purchasing power of households and boosts consumption of foreign goods mitigating the negative effects of import sanctions. Importantly, this comes at the expense of the households that want to hold foreign currency as a safe asset and thus are subject to the measures of financial repression that are used to strengthen the rouble. In other words, the policy of financial repression creates redistributive effects from savers (who tend to be richer households) to consumers of foreign goods (many of whom are poorer “hand-to-mouth” households).
Second, the nominal exchange rate is a signal about monetary policy, which is especially valuable in an environment with high uncertainty and low trust in policymakers. Budget deficit pushes the government to monetise its nominal liabilities. Even before this happens, uncertainty about the monetary policy can lower demand for local currency deposits, leading to higher inflation and a run on the banks. To regain credibility, anchor inflation expectations and stabilise the financial system, the central bank can adopt a nominal peg to communicate its policy priorities (Athey et al., 2005; Itskhoki and Mukhin, 2022a).
Future dynamics
Although exchange rates are notoriously difficult to forecast – even more so given the current extreme levels of uncertainty – there are good reasons to believe that the rouble will most likely depreciate in 2022-23. First, the fiscal considerations put a floor on how much the exchange rate can appreciate without causing significant tightening of the budget, as discussed above.
Second, given that there remain few restrictions on Russian imports that could be further imposed by Western countries, it is likely that further rounds of sanctions would be imposed on export. European countries are now planning to gradually move away from Russian gas and oil, which will eventually bring down the inflow of foreign currency into the Russian economy even if exports are partially rerouted to other destinations. Furthermore, as soon as European countries do not need to purchase Russian commodities, they are able to impose even stricter financial sanctions completely freezing foreign assets of Russian banks and firms. This, in turn, lowers the supply of dollars and euros, depreciating the rouble exchange rate and putting the banking system at risk of a bank run on foreign currency deposits.
Third, as the inventories of foreign intermediate and final goods are running low, the Russian economy would seek alternative foreign suppliers and switch to parallel imports. This increases the demand for foreign currency and depreciates the rouble. Finally, there is an increasing risk of “monetary depreciation” driven by loose monetary policy. Although as mentioned above, the central bank has put much effort into maintaining its credibility, a fall in export revenues and increasing expenses to support the economy can push the government to monetise its liabilities, which ultimately leads to inflation and depreciation of the nominal exchange rate.
Paradoxically, even a ceasefire resulting in a remote possibility of certain sanctions being lifted will likely depreciate the rouble. While lowering the probability of monetary inflation, this will increase imports and will make it easier to transfer money abroad, putting pressure on the rouble exchange rate.
To conclude, a strong appreciation of the rouble over the past two months was driven by import sanctions and financial repression, both of which lowered demand for foreign currency. This does not mean that the sanctions are not working – in fact, there is an important equivalence between import and export restrictions in terms of welfare effects and government fiscal losses. Stabilising the exchange rate allows the Russian government to anchor inflation expectations and support consumption but comes at the cost of the financial repression of domestic savers. In the medium run, the rouble is likely to depreciate due to falling demand for Russian exports, increasing demand for foreign goods and loosening of monetary policy to finance government expenditures.
References
Amiti, M., E. Farhi, G. Gopinath and O. Itskhoki (2017, 19 June), The border adjustment tax, VoxEU.
Amiti, M., O. Itskhoki and J. Konings (2022), Dominant currencies: How firms choose currency invoicing and why it matters, Quarterly Journal of Economics, forthcoming.
Athey, S., A. Atkeson and P. J. Kehoe (2005), The optimal degree of discretion in monetary policy, Econometrica, 73(5), 1431-1475.
Itskhoki, O. and D. Mukhin (2022a, 17 January), The Mussa puzzle and the optimal exchange rate policy, VoxEU.
Itskhoki, O. and D. Mukhin (2022b), Sanctions and the Exchange Rate, NBER Working Paper Series, 30009.
Lorenzoni, G. and I. Werning (2022), A Minimalist Model for the Rouble During the Russian Invasion of Ukraine, NBER Working Paper Series, 29929.
Sturm, J. (2022, 13 April), The simple economics of a tariff on Russian energy imports, VoxEU. | |||||
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"Jake Cordell"
] | 2023-08-14T00:00:00 | The Russian ruble’s slide past 100 against the dollar has exposed a multi-billion dollar dilemma at the heart of the Russian economy: how can the Kremlin carry on funding its war against Ukraine without triggering a surge in inflation and fresh fears of an economic crisis at home? | en | https://static.themoscowtimes.com/img/icons/favicon.ico | The Moscow Times | https://www.themoscowtimes.com/2023/08/14/kremlin-unfazed-as-ruble-crashes-through-100-vs-dollar-a82145 | The Russian ruble’s slide past 100 against the dollar has exposed a multi-billion dollar dilemma at the heart of the Russian economy: how can the Kremlin carry on funding its war against Ukraine without triggering a surge in inflation and fresh fears of an economic crisis at home?
The ruble dipped below the crucial level on Monday for the first time since March 2022, when the Russian economy appeared to be on the brink of collapse amid Moscow’s invasion of Ukraine and a cascade of Western sanctions.
Last year, sweeping capital controls, an emergency interest rate hike and a rapid surge in the production of guns, missiles, tanks and artillery shells to be used against Ukraine saved the ruble and helped Russia’s economy defy predictions of a double-digit hit to GDP.
But with the war having raged for 18 months and more Western sanctions now in place — such as an oil price cap and drastic cuts in European purchases of Russian gas — the ruble’s decline underscores the challenges Moscow will face in an attempt to repeat last year’s fire-fighting efforts.
The ruble has lost half its value since a peak in June 2022, a devaluation that has raised the specter of a familiar foe — inflation.
Prices are once again rising faster than the government’s official 4% target. Food prices, which usually fall in the summer months, are steadily increasing and the central bank’s forecast — penned before the latest currency slide — foresees inflation accelerating toward 6.5% by the end of this year.
“The collapse of the ruble has already triggered an inflationary spiral. It can only be stopped by bringing the rate back under 90,” said Yevgeny Suvorov, an economist at Moscow-based CentroCredit Bank.
For Russians who have grown accustomed to economic crises in the three decades since the fall of the Soviet Union, the ruble exchange rate has powerful symbolic importance as a marker of the economy’s overall health. Economists say the fall into triple-digit territory — a vital psychological threshold — could further push Russians to move their assets out of the country, or at least, into other currencies.
“It’s obvious that the ongoing weakening of the ruble will not only stoke inflation even more, but will undermine trust in the currency itself and the economy in general,” Yevgeny Kogan, an economics professor at Moscow’s Higher School of Economics (HSE), wrote in a post on his Telegram channel.
Foreign cash holdings are up 23% this year among Russians while outflows to foreign banks have jumped 41%, he noted.
Kogan said a sustained breakthrough of 100 rubles against the dollar could lead to serious price hikes by companies that use imported goods or equipment, and it might trigger financial panic among the population.
Across Russian society, a feeling that the government cares little about the falling ruble is spreading, with talk of how the Kremlin benefits from a falling currency cropping up across Russian social media.
A weaker currency means Russia’s energy exports, dictated by global dollar-based oil prices, will funnel more rubles into the government’s coffers.
The amount of rubles earned for every barrel of Russia’s Urals blend of crude oil has more than doubled this year — from 3,320 on Jan. 1 to 7,300, according to market data.
Overall, every 10-point slide in the value of the ruble against the dollar — from 90 to 100, for instance — brings in an extra 1 trillion rubles ($10 billion) for the Russian state, Renaissance Capital’s Sofya Donets calculates. The same fall adds 0.5-1 percentage point to inflation, Kogan estimates.
Those extra funds are sorely needed by Moscow, which has chalked up a 2.8-trillion ruble ($28 billion) budget deficit so far this year.
A weaker ruble means Russia can buy more arms, ammunition and pay higher salaries for soldiers, making devaluation an attractive short-term solution to the Kremlin’s budget woes and its top priority — funding the invasion of Ukraine. Battling inflation and dealing with the other domestic costs of a weak currency, can come later.
“It’s more important to get through the next few months, or until spring, and in the long run, if things turn out worse because of this, then it doesn't really matter. It matters, but what matters much more is the ability to be able to wage war and pay bills in the next 4-6 months,” Iikka Korhonen, head of the Bank of Finland Institute for Emerging Economies (BOFIT), said of the Kremlin’s logic.
With spending on the war the Kremlin’s overriding priority, analysts are poised for potentially drastic action from the Central Bank, whose main task since the invasion has been to mitigate the domestic economic impacts of Russia’s war.
Responding to the currency's slide, the Central Bank on Monday afternoon said its board of directors would hold an emergency meeting on Tuesday — its first extraordinary session since Feb. 28, 2022 — where it is set to raise interest rates from their current level of 8.5%.
The ruble temporarily strengthened above 100 on the news.
Last week, Russia's Central Bank suspended foreign currency purchases until at least the end of the year under its so-called “budget rule,” which would typically funnel excess profits from oil and gas sales into foreign currency holdings. But that measure had little effect in halting the ruble's descent. Yet more serious moves are not being ruled out.
“Monetary policy is by no means the only tool in the financial authorities’ arsenal,” said Alexander Bakhtin, an investment strategist at Moscow-based BCS brokerage.
“A return to mandatory regulations on the sale of foreign currency earnings and strengthening of currency controls is possible.”
But it remains far from clear that new capital controls would have the same effect in stopping the slide as it did 18 months ago. The shrinking of Russia’s current account surplus — down from $165 billion in the first seven months of 2022 to $25.2 this year — has significantly changed the ruble’s basic supply-and-demand dynamics.
The Central Bank has repeatedly indicated the strictest kinds of capital controls, like forced conversions of foreign currency earnings, should only be temporary measures and reserved for major financial crises. But with the Kremlin’s dead set on marshaling resources for its war, other options may be limited.
“Previously, the Central Bank was always very reluctant to take those kinds of actions,” said BOFIT’s Korhonen. “Now with the war, the cost-benefit analysis has changed, so those measures are always there. But the thing with capital controls is, the longer they are in place, the harder the costs will be.”
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9245 | dbpedia | 0 | 73 | https://www.readex.com/blog/rubles-renminbi-and-yuan-oh-my-geopolitical-fortunes-foreign-exchange | en | Rubles, Renminbi and Yuan—Oh My! The Geopolitical Fortunes of Foreign Exchange | https://www.readex.com/themes/rxtheme24/favicon.ico | https://www.readex.com/themes/rxtheme24/favicon.ico | [
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] | null | [] | null | Image Yaroslav the Wise, Grand Prince of Kyiv, gazes out from the Russian 1000-ruble note. Source: Russian Central Bank Suppose you were embarking upon the purchase of a car. A new one is out of the question; you don’t have that kind of money. You’ve been saving for this for a long time. You’ve chosen a nice used Lada—they’re a good Russian brand. You’ve come to terms with the seller so you pull out a bundle of… American dollars—you’re in Moscow, after all. | en | /themes/rxtheme24/favicon.ico | https://www.readex.com/blog/rubles-renminbi-and-yuan-oh-my-geopolitical-fortunes-foreign-exchange | Suppose you were embarking upon the purchase of a car. A new one is out of the question; you don’t have that kind of money. You’ve been saving for this for a long time. You’ve chosen a nice used Lada—they’re a good Russian brand. You’ve come to terms with the seller so you pull out a bundle of… American dollars—you’re in Moscow, after all. You remember a time in the late 1990s when the Russian Central Bank magically removed three zeroes from the face value of its currency. 1000 rubles became 1 ruble overnight. Then there was that time when President Gorbachev voided all 50- and 100-ruble notes in a matter of days in 1991. It could happen again. But not to dollars. So, the deal is done.
There are few countries outside of the Russian Federation where rubles can be easily used for everyday transactions. Even today a variety of foreign banknotes are unofficially preferred in Russia over its native ruble. Why? Russia is the largest country by area on the planet, rich in natural resources, with a distinguished history and nuclear weapons. But the ruble is a shadow of what it could be both domestically and on world markets, a facsimile of “hard currency.”
Now China, there’s a country with economic muscle! An enormous, highly disciplined population. Everything seems to be made in China, including nuclear weapons. They own piles of U.S. securities. Surely the yuan can be used at the corner bodega or the car wash? Outside of China and a few neighboring countries, probably not.
As of this writing, the Russian ruble is worth a little less than a penny in U.S. dollars. The Chinese yuan trades against the U.S. dollar at about 7 to 1. Is Adam Smith’s “hidden hand” secretly discounting the currency of countries with a significant socialist heritage? Well yes, in a sense it is. Socialism’s centralized planning dilutes (proponents might say “condenses” or “distills”) self-interest in economic terms and the global market doesn’t yet trust it, or at least hasn’t integrated successful long-term models of it. Nationalized or communist-inflected industries can be opaque to market intelligence and subject to political interference or collusion—hence America’s national security concerns about the Chinese company ByteDance, owner of the popular social media platform TikTok. For better or worse, since the end of World War II the U.S. dollar has been the world’s reserve currency; it’s recognized and honored pretty much everywhere. This is a huge benefit to the United States—also a danger. How did it come to be?
Readex has some excellent digital collections suitable for charting the geopolitical aspects of foreign exchange. In this essay we’re using BBC Monitoring: Summary of World Broadcasts, 1939-2001. It will provide us with an English-language reference distinct from U.S. sources, and a comprehensive perspective from which to examine global economic relations.
The beginnings of what has been widely criticized as “dollar imperialism” can be traced to the United Nations Monetary and Financial Conference held over the course of twenty-one days in July 1944 at the Mount Washington Hotel, a resort in Bretton Woods, New Hampshire. The conference site was chosen for its secluded, majestic setting and as a respite from the heat and humidity of major East Coast American cities.
As World War II ground to a conclusion the Allied countries were keen to prevent a global economic collapse once peace was reestablished. The U.S. was the preeminent wartime power and a creditor to both Great Britain and the USSR, so the conference took place on American soil and largely on American terms. Over 700 delegates participated, representing forty-four countries.
U.S. Treasury Secretary Henry Morgenthau, Jr. presided over the conference. It was organized into two commissions. Commission I was led Harry Dexter White, Assistant Secretary of the U.S. Treasury. That body was tasked with creating the International Monetary Fund (IMF). Commission II was chaired by the eminent British economist John Maynard Keynes. Its work led to the creation of the precursor to the World Bank. Both entities were intended to facilitate worldwide reconstruction and development and to promote economic stability. They continue in that mission today.
One person who most definitely was not invited was Hitler’s Minister of Economics, Walter Funk. BBC Monitoring has excellent commentary by Funk via the German Home Service on July 7, 1944, as the monetary conference was taking place. Funk had some sharp words about the proceedings:
One might think that, at the time of a world-wide military and political world conflict, there were more important things than discussions on a world currency plan. An impartial observer might ask what could be the practical value of discussing post-war international currency relations before this world-shaking struggle, with its tremendous upheavals and revaluations and its horrible destruction of lives and property, is decided. The answer, however, reveals the background, or at least the political and propaganda side, of the enemy’s currency discussions which are being pursued with so much expense, eagerness, and clamour for prestige. The world was supposed to believe that the Anglo-Americans considered their victory over National Socialist Germany and her Allies already so absolutely certain that it was, so to speak, a matter of great urgency to deal with peace plans. But why just currency plans? Because to Anglo-US money imperialism - we also call it Plutocracy - to think in terms of money and to rule by means of money, is the supreme law of life and the highest political (15 second break in transmission). As a result of political unreason, alterations in the economic and social structure, and especially the USA's foolish attitude in her foreign trade policy, these essential conditions became illusory.
At the Bretton Woods conference itself there were differing views on Germany’s role in postwar international finance. Morgenthau favored a deindustrialized Germany that could never again initiate or sustain a war. Assistant Secretary White was of a more internationalist mindset, open to reintegrating Germany and Japan into the financial family of nations. He also successfully courted Soviet participation in the conference. This left him vulnerable to charges of being a communist sympathizer, even a spy for the Soviet Union. Although no wrongdoing was conclusively proven, this and similar allegations relating to Japan tainted White’s reputation during his lifetime and afterwards.
While it was true that White was not averse to a Soviet role in global finance despite fundamental differences, his larger objective was to establish a strong U.S. dollar pegged to the price of gold; neither the ruble nor the British pound sterling was as reliable a source of value at that time. His convictions won the day, and the U.S. dollar was accepted as convertible for gold at $35 per ounce. All other countries’ currencies were indexed to the U.S. dollar. Member countries would contribute jointly to the IMF and the International Bank for Reconstruction and Development, and those institutions would provide loans and guidance, and enforce financial standards for countries in need of their resources.
This system lasted until August 1971 when foreign holdings of dollars outstripped U.S. gold reserves, and U.S. President Richard Nixon ended the convertibility of the dollar into gold. Shortly thereafter the dollar’s value “floated” against other currencies, as it does today. A commentator on Moscow radio in 1971 noted that dependence on the dollar for economic stability has its downsides when the dollar itself is overvalued.
There’s truth to the comment that the United States was diversifying its inflation risks to countries with substantial holdings in dollars. The United States can borrow its way out of financial difficulty so long as the dollar is seen as a haven for foreign investors. This is even more the case today as America’s national debt has risen dramatically. Printing money or issuing government bonds with the expectation that the world will automatically acquire those instruments on terms favorable to the United States is a seductive and dangerous indulgence.
Americans recently encountered a mild inflationary cycle in the years following the COVID-19 pandemic when annual inflation reached about 7%. Inflation has since dropped to about 3% but it persists as an issue in America’s 2024 presidential election.
As described in an excerpt from Moscow’s Nezavisimaya Gazeta in late 1998, Russians confronted a calamity on a far greater scale following the collapse of its foreign exchange market and the default on payments of its government bonds. In retrospect, Russia’s annual inflation rate in 1998 was “only” about 84%—still plenty high but mercifully less than the 240-290% range suggested as leading to “the brink of physical extinction.”
In general terms, when Russia’s nationalized industries fell into private hands following the demise of the Soviet Union in 1991, profits were offshored, and vital political and economic reforms were ineffective. Russia has also continued to be highly dependent on exporting petroleum, undergoing cycles of boom & bust similar to those of Venezuela depending on the vagaries of the market for oil & natural gas. Despite the insularity of its economy, in keeping with its Soviet heritage Russia seeks to exercise a sizable international security role, waging wars in Syria, Chechnya, and now in Ukraine. Funding protracted foreign conflicts while maintaining domestic prosperity is a difficult balance for any country to achieve.
China’s economic evolution was much different. The renminbi is used for domestic transactions while the yuan is used for foreign exchange. The yuan is a unit of renminbi. The yuan dates to 1889; its name refers to the roundness of Spanish silver dollars, whereas the renminbi was first issued in 1948 as “the people’s currency.” The People’s Bank of China allows the yuan’s value to fluctuate within 2% of a midpoint it sets each day. There are claims that the yuan has been slightly undervalued by the government to make Chinese exports more attractive to foreign buyers.
Nationalist Chinese delegates were present at the Bretton Woods conference and were in favor of basing foreign exchange on the U.S. dollar; at the time China too was a debtor to the United States and was dealing with Japanese and Soviet incursions on its territory. With the conclusion of World War II and the defeat of Imperial Japan, China’s civil war escalated. China’s economy changed drastically with the communist victory over nationalist forces in 1949.
For our purposes it’s expedient to jump ahead to Deng Xiaoping who introduced “socialism with Chinese characteristics” in 1982. This shift away from Stalinism is a significant reason why the Chinese economy has remained relatively stable while Russian economic progress has been highly erratic. The Chinese also had a head start on the Soviet Union’s transition to a mixed economy, and they proceeded more carefully and systematically. Government leadership was much stronger and more consistent.
Incidentally, the emphasis on “independence and self-reliance” echoes North Korea’s Juche ideology, but North Korea has only become more isolated from world affairs whereas China has embraced its international role.
Among Deng’s many reforms was the reopening of the Shanghai Stock Exchange in 1990. That trading forum traces its roots back to the mid-nineteenth century when shares and commodities were exchanged in Shanghai’s International Settlement, a territorial concession in which foreign nationals enjoyed broad latitude in their legal and commercial affairs. The Shanghai exchange was closed following China’s Communist Revolution in 1949. In the report below, two government officials tour the newly reopened exchange in 1991. Premier Li Peng emphasized that “the stock exchange involves risks” but concluded that “The exchange of securities serves the socialist economic construction.” Since 2017, Xi Jinping Thought has elaborated on Deng’s innovation in terms of sustainable development consistent with socialist ideals.
Russia’s introduction of market dynamics into its economy during and since the restructuring of the Soviet Union in 1989-91 could be conservatively described as “dramatic.” We might as well jump right in with a speech by President Mikhail Gorbachev in 1990. The reader can sense his frustration: the transition is both urgent and logistically complex. Of one thing he’s convinced, however. “…there is no return to the command system in the economy, nor can there be.”
What are people still criticising the plan for? They say it’s not clear how we shall introduce a market when our “tools” are not ready. But the point is that we need this seven- or eight-month preparatory period precisely to work on it. We should adopt a law on taxes, an anti-monopoly law, a law on entrepreneurialism, on small and medium-sized enterprises, laws on a credit-financial and banking system, on a stock exchange and on social welfare. We cannot enter the market without all this. The establishment of an infrastructure which is necessary for the market plus a social welfare machinery—all this should be thoroughly worked through.
---
I am convinced of one thing: there is no return to the command system in the economy, nor can there be. Let’s tell the people the whole truth about this system, at last. In terms of resources, for instance, we are no worse off than the USA. Yet if you look at the national income per capita, it’s double there. The economic system in our country is such that it is eating up our national resources. The reason for the lag is not in technology itself but in the fact of whether a person is interested in the results of his work. If we create a new economic environment for man, for the worker, then we shall put an end to the “eating up” of resources. The whole world has gone through that and I am sure of this, having met recently prominent economists from the USA, Japan and other countries. We can create such an environment if we launch in a real way the work to form a socialist market economy.
Russia’s launch of its socialist market economy did not go especially well. Those examples cited in the opening of this essay were quite real, and they had consequences. That situation where the 1000-ruble note lost its three zeroes? That was in response to the ruble trading not at 4 rubles to the dollar as in 1950, nor at 1.65 to the dollar as on March 31, 1988, nor even at 136 t0 the dollar as in March 2022, but at over 6000 to the dollar in 1997.
ROUBLE, BONDS UNDER PRESSURE
Ordinary Russians feel pinch as dollar hits R6,000 mark
Ordinary Russians felt the effects of a slump in the value of the rouble on the currency market when exchange bureaux raised the dollar rate by 30 points at a stroke on 1st December, Ekho Moskvy radio reported.
It said that by the evening of that day the dollar had hit the R6,000 mark.
“The Central Bank was unable to cope with the growing demand for hard currency, triggered by the flight abroad of capital held by foreign financial companies,” the radio said.
Ekho Moskvy radio reported on 2nd December that demand for foreign currency in cash was up again, with the dollar being sold for R6,000 - R6,020.
“The situation at bureaux de change is being likened to panic. Demand for the dollar is said to be about twice the normal level. The people running some of the bureaux, however, put this down to the fact that Christmas is coming and say that many might be buying foreign currency to celebrate abroad,” the radio said.
Christmas indeed—for those who had already converted their rubles and gone abroad! Consider that today with all the sanctions plus the expense of the Ukraine conflict the ruble trades at about 92 to the dollar. 6000-to-1 is much worse. In that respect Russia has made progress, but it has been uneven progress to say the least. The entire page shown above is instructive. The Central Bank blamed “the world financial crisis” for the crash of the ruble, spent 10-15% of its gold propping up its value, hinted that ‘surgery” may require suspending trading on the MICEX [Moscow Interbank Currency Exchange], fixing the exchange rate artificially, and defaulting on Russian government bonds. All these things did happen. Some short-term Russian bonds were promising buyers over 50% interest. The “surgery” did save the patient, but such intervention is not normal in a healthy market. Large, sudden changes in the value of a country’s money make daily life there incredibly difficult and inhibit foreign trade severely.
There were other, more nefarious factors at play in the Russian economy in the 1990s. Premier Yevgeniy Primakov detailed them in a speech to Parliament on October 14, 1998. The entire speech is worth reading but we’re just going to note some of the highlights.
Primakov cuts right to the chase. Food rationing is a real possibility: two weeks’ reserve for only one-third of the population. A terrible situation.
Business owners and managers are making more money by speculation and subterfuge than by operating their businesses and paying their employees and suppliers. The state is cheated out of revenue. 80% of non-civil service workers are not getting paid. Contrary to the assertion of the author of the “extinction” article excerpted above, Primakov was telling the truth.
Privatization of state enterprises is individualized. Surplus value accrues to the benefit of the owners rather than to the treasury. The underside of self-interest is self-dealing. These are the oligarchs. If a gold mine can’t make money, either the vein is tapped out or something is seriously amiss.
More gamesmanship. First planes, now mansions. Money goes everywhere except to the state.
It almost seems as though Russian businesspersons learned about corporate governance by watching American cinema; Wall Street (1987), and The Firm (1993) come to mind. The oligarchs condensed a century of capitalist excess into a decade.
A complementary approach to economic reform would be to diminish the role and impact of the U.S. dollar in the economy. Both Russia and China are doing just that, and for good reasons. Both countries are highly averse to U.S. sanctions. Vladimir Putin and Xi Jinping justifiably want more control over their own currencies than they have while subject to U.S. economic policy through overexposure to the dollar. Just as many countries in Europe have joined the European Union and adopted the euro as a shared currency, Russia and China have banded together with Brazil, India, South Africa (the “BRICS”) and other countries to establish their own trading bloc in which the ruble and the yuan have pride of place.
Reducing the influence of the U.S. dollar has been a source of tension in Russia. In 1996 Sergey Dubinin, head of the country’s Central Bank, was optimistic that the ruble might supplant the dollar domestically in the near future.
Two years later in the Primakov speech excerpted above, de-dollarization was viewed as less urgent than having ready access to the capital that U.S. dollars represented.
It is telling that not only are Russia and China deprecating use of the dollar, they’re also enhancing both the holdings and the convertibility of the ruble and the yuan with each other. Moreover, both countries are building up their gold reserves and cooperating in the acquisition and refining of gold. After all, Russia is the world’s second largest gold producer, and the countries share a border. Perhaps we’ll see a regional reprise of the indexing of national currencies to gold as formalized at the Bretton Woods conference in 1944.
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] | null | [
"Irina Ivanova"
] | 2022-06-28T11:16:00-04:00 | After its value plunged to less than a U.S. penny, the ruble is now trading 40% higher than before Russia attacked Ukraine. Why? | en | https://www.cbsnews.com/news/russia-ukraine-ruble-currency-russian-economy-sanctioms-2022/ | Even as Russia marks a historic default on its debt, the nation's currency is gaining strength. The ruble hit a new high against the dollar this week, continuing its streak as the best-performing currency in the world this year.
Three months after the ruble's value fell to less than a U.S. penny amid the toughest economic sanctions imposed on a country in modern history, Russia's currency has mounted a stunning turnaround. The ruble has jumped 45% against the dollar since January, with one dollar worth 53.45 rubles as of Tuesday.
"It's an unusual situation," said Jeffrey Frankel, professor of capital formation and growth at the Harvard Kennedy School.
Normally, a country facing international sanctions and a major military conflict would see investors fleeing and a steady outflow of capital, causing its currency to drop. But Russia's unusually aggressive measures to keep money from leaving the country, in combination with a dramatic rise in fossil-fuel prices, are working to create demand for the ruble and pushing up its value.
The ruble's resiliency means that Russia is partly insulated from the punishing economic penalties imposed by Western nations after its invasion of Ukraine, although how long that protection will last is uncertain.
At the same time, Russia appears to have defaulted on its international debts for the first time in over a century. After a key payment deadline passed on Sunday, bondholders said they had not been paid, according to Bloomberg and Reuters.
Why the ruble recovered
The main reason for the ruble's recovery is soaring commodity prices. After Russia invaded Ukraine on February 24, already high oil and natural gas prices rose even further.
"Commodity prices are currently sky-high, and even though there is a drop in the volume of Russian exports due to embargoes and sanctioning, the increase in commodity prices more than compensates for these drops," Tatiana Orlova, lead emerging markets economist at Oxford Economics, told CBS MoneyWatch recently.
Russia is pulling in nearly $20 billion a month from energy exports. Since the end of March, many foreign buyers have complied with a demand to pay for energy in rubles, pushing up the currency's value.
At the same time, Western sanctions and a wave of businesses leaving the country have led to a drop in imports. In the first four months of the year, Russia's account surplus — the difference between exports and imports — rose to a record $96 billion.
"We have this coincidence that, as imports have collapsed, exports are soaring," Orlova said.
Closing the floodgates
Russia's central bank has also propped up the ruble with strict capital controls that make it harder to convert it to other currencies. That includes a ban on foreign holders of Russian stock and bonds taking dividend payments out of the country.
"That used to be quite a significant source of outflows for currency from Russia — now that channel is closed," Orlova said.
Meanwhile, Russian exporters are required to convert half of their excess revenues into rubles, creating demand for the currency. (The conversion requirement was 80% until the end of May, when it dropped to 50%.) On top of that, Orlova noted, it's extremely difficult for foreign companies to sell their Russian investments, another obstacle to capital flight.
"Although we are seeing these announcements that Western companies are leaving Russia, quite often they simply have to hand over their stakes to their local partners. It doesn't actually mean they are being paid a fair price for their stakes, so they are not moving large amounts of cash from the country," she said.
All these factors are creating demand for rubles, boosting the currency's value.
"While this is not a free market-determined exchange rate, ruble stability is at the same time 'real,' in the sense that it's driven by Russia's all-time high current account inflows," Elina Ribakova, deputy chief economist at the Institute of International Finance (IIF), said via email.
Russia still feeling the pain
The ruble's rally has created some problems for Russia's central bank, which has taken steps to bring its currency closer to historic levels, including loosening capital controls and lowering interest rates.
A strong currency doesn't mean Russia is immune to economic pain, however. Although the ruble's bounceback and the strength of Russia's oil exports have temporarily cushioned its economy from sanctions, the effect is likely to be short-term, experts say.
Pavel Molchanov, an analyst at Raymond James, noted that Russian oil is selling for $35 per barrel less than Brent crude, the international benchmark, reflecting the discount buyers demand for doing business with the nation.
"Nobody today would buy Russian oil at $120 a barrel. And in fact there are plenty of energy buyers who will not buy Russian oil at any price today, whether because of sanctions or because of reputational risk," he said. "The Russian economy is losing approximately $200 million dollars a day — or $70 billion on an annual basis — as a direct result of the war."
What's more, European nations have vowed to cut their imports of Russian gas by two-thirds this year — a potentially crippling blow given Russia's dependence on energy exports.
One sign the Russian economy remains under severe pressure is that inflation in Russia is more than double the rate in the U.S. That's creating pressure for Russians to move their money out of the country, said Frankel of the Harvard Kennedy School.
"The temptation to get assets out of Russia, for Russian citizens to find a way around the controls ... will grow, especially with the inflation rate now as high as it has shot up," he said.
Likewise, Russia's default on more than $100 million in interest payments to foreign bondholders over the weekend is another sign of its growing international isolation. Russia had the funds to make the scheduled payments, but the U.S. Treasury Department has blocked the country's ability to service its debt through American banks.
"Russia's not short of money — it has billions in oil and energy revenues — but it was the sanctions on Russia which prevented it from transmitting the payment," Karin Strohecker, emerging markets correspondent at Thompson Reuters, told CBS News.
Another concern for Russia is that the cutoff of imports could lead to industrial shortages, while a drop in foreign investment is expected to drag down the country's economic growth for years, the Institute of International Finance predicted. The IIF expects Russia's economy to shrink 15% this year, wiping out more than a decade of economic development.
"Export controls, the 'brain drain' of talent out of the country; a European shift away from Russian energy dependence and an exceptionally unfriendly business climate will all weigh on Russia's growth in the years to come," Ribakova said. | ||||||
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] | null | [] | null | The ruble or rouble was the currency of the Soviet Union. It was introduced in 1922 and replaced the Imperial Russian ruble. One ruble was divided into 100 kopecks. Soviet banknotes and coins were produced by the Federal State Unitary Enterprise in Moscow and Leningrad. | en | Wikiwand | https://www.wikiwand.com/en/Soviet_ruble | The ruble or rouble ( ; Russian: рубль, romanized: rubl', IPA: [rublʲ]) was the currency of the Soviet Union. It was introduced in 1922 and replaced the Imperial Russian ruble. One ruble was divided into 100 kopecks (копейка, pl. копейки – kopeyka, kopeyki). Soviet banknotes and coins were produced by the Federal State Unitary Enterprise (or Goznak) in Moscow and Leningrad.
In addition to regular cash rubles, other types of rubles were also issued, such as several forms of convertible ruble, transferable ruble, clearing ruble, Vneshtorgbank cheque, etc.; also, several forms of virtual rubles (called "cashless ruble", безналичный рубль) were used for inter-enterprise accounting and international settlement in the Comecon zone.[5] | |||||
9245 | dbpedia | 1 | 68 | https://foreignpolicy.com/2023/07/23/russia-ruble-money-putin-dictatorship-soviet-union-tsars-history/ | en | How Dictators Make Money—and Money Makes Dictators | [
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"Carey K. Mott",
"Adam Tooze",
"Alexey Kovalev",
"Steven A. Cook",
"Christina Bouri",
"Christina Lu",
"Robert E. Kelly",
"Paul Musgrave",
"Julian E. Zelizer"
] | 2023-07-23T00:00:00 | A new history of Russia’s ruble highlights the reciprocal relationship between autocracy and monetary policy. | en | Foreign Policy | https://foreignpolicy.com/2023/07/23/russia-ruble-money-putin-dictatorship-soviet-union-tsars-history/ | In a financialized world, can currencies shape geopolitics? Hardly a week passes without a pundit forecasting the future of the global order on the basis of subtle changes in the stock of currencies and gold stashed in central banks—as if a few more Chinese renminbi in South America, a little more gold in Asia, or the price of a virtual currency anticipates a world that is more democratic, autocratic, or libertarian. The same goes for broader trends, such as the growing share of Chinese renminbi and other forms of “autocratic money” in commodities trade, sovereign lending, and other global markets historically dominated by the West.
This punditry is not unwarranted. And yet punditry inevitably misses some crucial context—context that only fine-grained case studies can provide. Societies have always created currencies with a political function in mind—but the qualities of a currency, in turn, can also shape politics, both domestic and global. Ekaterina Pravilova’s The Ruble: A Political History persuasively offers Russia’s currency as a case study in the entanglement of money and power, and in so doing, encourages us to understand what catalyzes these global trends. A 200-year “biography of a currency,” the book positions the ruble as both an important part of imperial organization and an unexpected anchor of Soviet influence. The ruble also emerges, amid political and financial crisis, as a potential instrument of Russian democracy—yet its history ultimately demonstrates how a currency can become a primary tool for creating and maintaining an autocracy.
And while Russia’s singular monetary history has earned its economy a “backward” reputation, better known for profiting from geopolitical chaos than sound policy, it has also made the country a pioneer, leading it in a direction that many autocracies are headed today—namely, toward greater isolation from the West’s financial ecosystem. Whether that will also involve greater financial cooperation with other autocratic powers, including, as many anticipate, increased denomination of its trade and investment in China’s renminbi, depends on the Russian government’s conception of its own currency—and the related strength of its own autocracy.
When Russia first issued paper rubles in 1769, nobody considered these assignats to be real money. Catherine the Great implored Russians to trust the state, and so made these bills exchangeable for copper and silver coins stored in Assignat Banks. Before long, the expanding Russian empire demanded more paper, and Catherine supplied it in excess of the state’s stock of metal—that is to say, on credit. She vouched for assignats even amid inflation, and with no independent central bank to hold her accountable, their value depended on the sanctity of the sovereign’s word.
Assignats thus became Russia’s initial form of autocratic money, projecting Catherine’s absolute authority. At a time when the rest of Europe was demanding monetary accountability, Russia backed its currency’s value with its monarch’s “sublime power” rather than any material collateral. When Nicholas I reformed the system in 1839, replacing assignats with silver-based bills backed by the “entire patrimony of the state” rather than a mere personal promise, he intended to maintain this autocracy; indeed, the state’s wealth was not nearly sufficient to provide this support, given that it only had sufficient silver to back up one-sixth of the rubles in circulation. There was no way to actually redeem the entire nation’s wealth under these conditions: Unlike the gold reserves in Europe’s central banks, which were independent from their state’s treasury, Russia’s bullion reserve—representing the bulk of its tangible wealth—was the only one in Europe directly controlled by the state.
Liberal economists and intellectuals in Russia took issue with this lack of monetary independence. Inevitably, a monarch succumbs to the temptation to generate revenue by printing more money, leading to inflation. If money truly represented the nation’s wealth, as Nicholas I claimed, then the tsar should be prevented from destroying that wealth. Since the people bore the cost of the tsar’s excessive money printing, and they lacked political representation, the “people’s ruble” should be convertible—to gold, silver, or something else—and the state should not issue money beyond this wealth.
Where else would Russia get money? If the tsar couldn’t print it as needed, he’d have to take it from foreigners in exchange for Russia’s sovereignty.
Russian nationalists countered that convertibility impeded the tsar’s ability to finance wars that would expand the empire and defend Christian Orthodoxy. Where else would Russia get money? If the tsar couldn’t print it as needed, he’d have to take it from foreigners in exchange for Russia’s sovereignty. Having observed that the French monarchy’s large borrowing required it to cede power to its creditors, Russia avoided borrowing in any significant way until its 1877 war with Turkey. To some, its fiscal prudence had been a virtue—even leading U.S. diplomat Alexander Hill Everett to imagine a world in which Europe was united under Russia’s military, the only one not funded by public debt.
But Sergei Witte, a savvy bureaucrat who defined Russia’s monetary thinking in the 1890s, and the central figure in Pravilova’s history, agreed that backing the currency with gold was a good idea—but not because a gold standard forced the state to commit to rational monetary policy and limited its demands for cash, as liberals hoped. Rather, Witte believed that adopting gold would become a source of stability for the ruble and national pride for Russia; a necessary reassurance to foreign creditors; and, finally, admission to the club of economically civilized nations. Russia’s conservative faction thus spun the liberal idea of convertibility into the rhetoric of the monarchy.
In 1897, Russia, Europe’s only gold-producing country and claiming its largest bullion reserve, became the last major economy to join the gold standard. Witte’s gold-backed paper and small silver change was immediately unpopular among peasants, urbanites, and indigenous Russians alike. Billed as a necessary step toward modernity, Witte’s reform struck many as a return to a medieval economy. Some asked why a relatively poor European country was stockpiling gold, rather than spending it on, say, public education. “All of thinking Russia was against” it, Witte admitted, to the point that journalists in France, the country whose monetary thinking so influenced his plan, called it a “monetary coup d’état.”
Though a coup captures the reform’s dubious origins—Witte’s backroom dealings, a secret decree, and few administrative controls—this isn’t totally accurate. Russia managed to avoid the political revolutions that had forced many of Europe’s other gold standards. And as unpopular as the reform was with Russian citizens, it did please one important faction. According to one source, foreigners invested more capital in Russia in the year after Witte’s reform than the prior 40 years combined.
As its empire expanded, Russia became one of the most aggressive participants in capital markets, and Witte’s gold standard locked it in a vicious cycle: The bigger it became, the more money it needed to print or borrow, and the more gold it needed to hold in reserve. But the more it held in reserve, the less it had to spend, so the more it needed to print or borrow. Soon, Russia was borrowing gold abroad in order to sustain the rate at which it was printing gold-backed rubles, overlooking the fact that this cross-collateralized its bullion reserve, exposing it to both foreign and domestic creditors.
Most countries would simply suspend gold convertibility during war and issue fiat currency instead, but the size of Russia’s foreign debts prevented this. Revolutionaries, fed up with the state’s unaccountable, debt-funded budgets, called for an end to foreign borrowing at the expense of the Russian people. Hoping to expose the state’s insolvency, they circulated a manifesto, partly drafted by Leon Trotsky, that started a run on the regime. Depositors emptied their savings accounts, refusing to pay taxes or accept rubles for payment, while panicked creditors tried to offload Russian bonds.
The regime survived this financial crisis, but the revolution’s calls for political reform had some success: In 1905, Russia transitioned to a constitutional monarchy, and a year later elected its first legislature. However, the State Duma was given little power to separate the State Bank from the treasury, and the state maintained total monetary control.
Whereas, in the eyes of liberals and revolutionaries, the gold standard in other European countries signified true constitutionalism—political representation that demanded transparent financial policy—Russia’s gold policy was supposed to compensate for its lack of such assurances. But for Russians, the government’s rationale was a joke that, according to Vladimir Lenin, then an exiled Bolshevik leader, “made the entire world laugh.”
The viability of this unusual system was tested yet again during the First World War, which caused a race for gold that saw Russia pay unprecedented prices for it on foreign markets and led the state to call in all the country’s gold except the holiest Orthodox relics. “You’ve got a lot of gold trinkets,” read one official’s announcement, and “it is your patriotic duty to deliver all this useless luxury to the state.” Many of these trinkets were worth more in their original form than melted into gold bars. Some Russians, fearing seizure, melted their stashes of gold coins, the easier to carry them out of the country as newly crafted necklaces. The scheme netted only 655,000 rubles—enough for 13 days of wartime expenses.
World War I proved too much for Russia’s financial policy, and in 1914 it abandoned the gold standard. An income tax (which was transparent) and government bonds (which were voluntary) had replaced convertibility as the democratic mechanisms akin to a stake in Russia’s government, but they provided neither sufficient revenue to the state, nor adequate representation to the people.
Thus, even the Bolsheviks, so eager to eliminate money on the way to socialism, found that they still needed it, and generated revenue by printing rubles beyond anything seen by their imperial predecessors.
Thus, even the Bolsheviks, so eager to eliminate money on the way to socialism, found that they still needed it, and generated revenue by printing rubles beyond anything seen by their imperial predecessors. (The Bolshevik-created bureaucracy would soon employ three times as many officials as the imperial government.) Financing the government through monetary emission was not the Bolsheviks’ original plan, but central planning required coordination, and money helped organize resources. Soon, revolutionaries were simply trying to manage the ruble’s depreciation and maintain the state’s monopoly on money-printing.
Reflecting on these mishaps, the early Soviet state consulted a group of experts in 1920 to consider whether money should, in fact, exist under socialism. One participant, Vladimir Zheleznov, argued that money was the only language expressing social needs. To be sure, it represents a “compromise between personal freedom and social organization,” but Zheleznov suggested that each person has an economic interest—even under socialism—and this interest is expressed in money.
Zheleznov’s view, which drew on the Aristotelian concept of money (nomisma) as a tool of reciprocity among citizens, informed the Soviet Union’s New Economic Policy (NEP) in 1921. The NEP allowed citizens to keep money in any amount, replaced Soviet food requisitions with proper transparent taxes, and replaced the imperial ruble with a Soviet one. But just as ancient Greek currency became, over time, a tool for imperialism, the Soviet reform returned Russia to Witte’s imperial standard.
Lenin, like Witte, thought gold might attract foreign investors the way it had after 1897. And so the new treasury notes, which were backed by the state’s credit just like Nicholas I’s bills, circulated alongside bank notes ostensibly backed 25 percent by gold. But with its gold reserves impaired by the war effort (and its Gulag camps yet to properly restart gold mining in Siberia), Lenin’s forces had to raid the last stash of gold in the country, the coffers of the Orthodox church.
But even as it stockpiled gold, the state never actually sanctioned the ruble’s convertibility as promised. “If a certain Ivanov comes to [the] State Bank” demanding gold, said the people’s commissar of finance, then they would assume Ivanov is a counterrevolutionary hoping to buy “a little gold mug with the tsar’s portrait.” With so many unexchangeable rubles circulating, Russians once again saw convertibility as “a panacea for our economy,” but subsequent reforms in 1947 and 1961 did not grant monetary independence—according to Pravilova, they merely reaffirmed the political role of Soviet money as “an instrument of governance, propaganda, and Cold War diplomacy.”
Both imperial and Soviet governments meddled with the monetary system without changing the institutional and political foundations of Russia’s economy, nor fixing its fundamental problem: a lack of productivity. It is no wonder, then, that former Soviet states celebrated their independence by issuing their own national currencies.
Reflecting on Putin’s reign, Pravilova writes that the ruble has absorbed the cost of attacks on Chechnya, Georgia, Crimea, and Ukraine. Putin’s second invasion of Ukraine in 2022 rendered the ruble mostly inconvertible to Western currencies and limited Russia’s access to global finance. Once more, the ruble became a symbol of autocracy and autarky to the West, while its exchange rate prophesied Russia’s fate in its latest war. It is why Putin rushed to stabilize the ruble after the invasion, and why the Biden administration hastened to declare its sanctions on Russia had reduced the currency to “rubble.”
Several scholars have argued that money can play a role in creating and shaping democracy, and Pravilova demonstrates that powerful rulers can use the very same instruments to control the public and consolidate their autocracy. While most of Europe was democratizing and developing the modern toolkit of central banking, Russia managed domestic crisis by changing the ruble’s form, value, or metallic backing, often in lieu of political reform. By designing a currency that maintains autocracy, true monetary accountability will remain beyond the public’s reach.
Once more, the ruble became a symbol of autocracy and autarky to the West, while its exchange rate prophesied Russia’s fate in its latest war.
Before Russia’s gold standard was co-opted by monarchists for the sake of securing foreign credit, it was a way for liberals to demand government accountability under a regime that did not offer true political representation for its people. This concept was always undermined by a lack of monetary independence in Russia, which became liberals’ second major demand for accountability. The ruble remains one of many marginal currencies—occasionally sanctioned, constantly fluctuating, and rarely circulating outside trade alliances—issued by autocrats hoping to retain the centrality of the state over the monetary system.
From Turkish President Recep Tayyip Erdogan’s historically inflationary policies to Indian Prime Minister Narendra Modi’s unilateral seizure of rupees, Putin is far from the only ruler forcing the costs of his regime on citizens who lack proper representation. Some of these rulers have sought new means to defend their autocratic model and challenge the U.S. dollar network with monetary symbols of their authority.
Today, autocratic countries make more than half of the world’s gold purchases, some of which insulate their economies from Western meddling or back trade-oriented cryptocurrencies. Broader currency alliances aim to directly challenge the dollar standard, but attempts in Latin America and other emerging markets have crumbled for lack of a stable keystone currency.
China’s renminbi may be the politically aligned alternative they seek. About 2.5 percent of foreign official currency reserves are held in renminbi, with almost one-third of that amount owned by Russia alone. Chinese President Xi Jinping’s capital controls make the renminbi’s convertibility into Western currencies doubtful, limiting its utility for now. A larger alliance of smaller currencies allays some of that concern, but it also means that, as in imperial Russia, it is the autocrat’s promise that backs up the renminbi, and financial stability depends on his goodwill.
Faced with this prospect, The Ruble contributes to a recently reinvigorated debate: What is money? Is it a mechanism of exchange and credit, or a tool of governance and coercion? A check on autocratic power or a symbol of that power? The ruble’s role at the center of crisis and reform shows that it could be all these things, or none of them. After all, currency not only reflects the political order—it actively shapes it. | |||||
9245 | dbpedia | 0 | 32 | https://rujec.org/article/27973/ | en | Soviet economies — a never ending story? | [
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"Marek Dabrowski"
] | 2016-08-31T00:00:00 | Since the collapse of the Soviet Union, its successor states have suffered from cyclical currency crises. The most recent episode of 2014–2016 was caused by a combination of external and domestic factors. The former include tighter US monetary policy, slower global growth, and declining commodity prices, whereas the latter include the former Soviet Union (FSU) economies’ extreme macroeconomic fragility (a legacy of past crises), numerous microeconomic rigidities and structural distortions in addition to governmental deficits. In addition, the Russian–Ukraine conflict dealt a heavy blow to both economies and their neighbors. Effective anti-crisis policies must aim at eliminating all deep-rooted causes of repeated financial and macroeconomic turbulence and must involve deep structural and institutional reforms in the entire region. | en | /i/ico/rujec.ico | Russian Journal of Economics | https://rujec.org/article/27973/ | ContentsContents
Article InfoArticle Info
CiteCite
MetricsMetrics
CommentComment
RelatedRelated
FigsFigs
TabsTabs
RefsRefs
CitedCited
Article title
Abstract
Keywords
1. Introduction
2. Definitions and theoretical models
3. Historical overview
3.1. Collapse of the Soviet ruble (1989–1993)
3.2. Monetary instability in the FSU (1992–1995)
3.3. Russian and CIS financial crisis of 1998–1999
3.4. Fallout from the global financial crisis (2008–2009)
4. Dynamics of the 2014–2016 crisis
4.1. Russia
4.2. Ukraine
4.3. Other FSU countries
4.4. Shortcomings in crisis management
4.4.1. Foreign exchange interventions
4.4.2. Interest rate increases
4.4.3. Changes in monetary regimes and transparency problems
4.4.4. Foreign exchange controls
5. Role of global and regional factors
5.1. US monetary policy
5.2. Decline in oil and commodity prices
5.3. Consequences of Ukrainian conflict
6. Deep roots of the FSU currency crises
6.1. Ghosts of the past: Limited credibility of FSU currencies
6.2. Poor business climate and capital flight
7. Conclusions and policy lessons
References
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9245 | dbpedia | 0 | 65 | https://globalfinancialdata.com/russia | en | Global Financial Data | [
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"Odin Mayland"
] | 0001-11-29T16:07:02-07:52 | We are a Global Data provider: For over 25 years Global Financial Data has been providing alternative historical economic and financial data. | en | /templates/shaper_helixultimate/images/favicon.ico | https://globalfinancialdata.com/russia | The first coins issued in present-day Russia were minted by Greek colonies on the Black Sea in the fifth century BC. Roman coins were issued from the first century BC on. The Bosporan kings also issued coins similar to those of Rome up until the reign of King Rhescuporis VI (304-342). During early medieval times, Islamic silver dirhems reached the area around Kiev and ultimately the Baltic regions.
The rulers of Kiev issued their own coins, based upon those of Byzantium, beginning with the reign of Vladmir I (978-1015). Both gold Zlatnik (equivalent to the Byzantine nomisma) and silver srebrenik were issued. No coins were issued in Russia from the twelfth to the fourteenth centuries, and silver ingots (known as grivnas), jewelry and clipped coins acted as media of exchange.
In the late fourteenth century, Russian principalities began issuing silver denga equal to 1/200th of a ruble. Under Ivan III (1462-1505), the coinage of the Principality of Moscow became the principal currency in Russia, though the values of coins varied with dengi from Pskov and Novgorod equal to two Muscovite dengi.
The Russian Tsardom was established on January 16, 1547 under Ivan IV the Terrible. He unified the coinage system, making the silver kopek, equal to 2 dengi, the basis of the system. In the 1600s, talers began circulating in Russia and in 1654 Tsar Alexei Mikhailovich issued talers restruck as silver rubles equal to 100 kopeks. Peter the Great transformed Russian coinage, expelling foreign coins and introducing machine-manufactured coinage. Russian coinage remained basically unchanged until the fall of Russian Tsars.
Russia reformed the Ruble (RUEI) under Elizabeth on November 23, 1755, setting 1 Gold Imperial equal to 10 Silver Rubles or 1000 Copper Kopeks. Paper Assignatzia (RUEA-Ruble-Banco) also circulated, though usually at a discount to specie money. The monetary system was reformed on July 1, 1839 with 1 Silver Ruble (RUES) set equal to 3.5 Ruble Assignatzia (RUEA). Credit Ruble Banknotes (RUEP) replaced the Ruble Assignatzia on June 1, 1843. Russia went on the Gold Standard on January 3, 1897 and introduced the Gold Ruble (RUER), which was used until the outbreak of World War I.
The Russian Socialist Federative Soviet Republic (RUF) was established on January 28, 1918, and the Union of Soviet Socialist Republics (SUR) was established on December 30, 1922, including Russia, Ukraine, Belorussia and Transcaucasia. The Soviet Union was dissolved on December 25, 1991, when The Russian Socialist Federative Soviet Republic became the Russian Federation (RUS).
During the Russian Civil War, many of the regions within the former Russian Empire formed states that were eventually incorporated them into the Soviet Union. Some of these states, such as the Ukraine, became Soviet Republics and independent nations after the dissolution of the Soviet Union. Others, such as the Far Eastern Republic, Khiva, or Bukhara, were incorporated into the Russian S.F.S.R. (RSFSR) or other Republics and did not reemerge after the dissolution of the Soviet Union. States such as Khiva and Bukhara, which had some type of formal existence before the Russian Civil War, are treated separately, but states such as the Far Eastern Republic, which never existed as separate entities before or after the Russian Civil War, are discussed here.
After the Revolution, the Soviets began issuing paper Rubles, often referred to as the Ruble Sovnazki (RUFS), which lead to a huge inflation. The first currency reform occurred on January 1, 1922 when the Ruble of 1922 (RUFR) replaced the Ruble Sovnazki of 1921 at 1 Ruble of 1922 equal to 10,000 Ruble Sovnazki. On October 22, 1922, the 1923 Ruble (SUB) replaced the 1922 Ruble at the rate of 1 1923 Ruble equal to 100 Rubles of 1922. The Chervonetz (SUC) was introduced on December 27, 1922, which was backed 25% by gold, and eventually replaced the Ruble Sovnazki as the unit of account.
The Gold Ruble (SUG) was introduced on March 7, 1924 equal to 1/10 Chervonetz and 50,000 Rubles of 1923. A New Ruble (SUN) replaced the Gold Ruble on December 29, 1947 at the rate of 1 New Ruble equal to 10 Gold Rubles. On January 1, 1961, the Hard Ruble (SUR) replaced the New Ruble at the rate of 1 Hard Ruble equal to 10 New Rubles.
After the dissolution of the Soviet Union, Russia replaced the Soviet Ruble with the Russian Ruble (RUR) at par. On 24 July 1993, Russia announced that Soviet and Russian notes issued before 1993 would become invalid as of 26 July. In Russia, the period for exchanging notes issued before 1993 lasted until 31 August 1993. Russia's demonetization of notes issued before 1993 notes marked the end of attempts to keep the former USSR largely intact as a ruble zone. In some former Soviet republics, Soviet and Russian notes issued before 1993 remained legal tender for a time even though they had ceased to be legal tender in Russia.
The inflation that followed led to the need to introduce a New Ruble (RUB) at the rate of 1 New Ruble equal to 1000 old Rubles. Hence, one of the new Russian Rubles is worth 5 quadrillion (5,000,000,000,000,000) Tsarist gold Rubles. The Ruble is divisible into 100 Kopeks, and has been issued by the State Treasury and by the State Bank (Gosbank).
The Far Eastern Republic issued Ruble (DBRR) banknotes while it existed. The North Russian Government, issued Ruble banknotes (RUNR) that were valued at the rate of 40 Rubles equal to 1 Pound Sterling. These notes were backed by a currency board installed by John Maynard Keynes. Numerous other entities within Russia issued banknotes during the Russian Civil War, though all of the notes were tied to the Soviet Ruble and lacked an independent existence.
The Russian Autonomous Republic of Tatarstan has issued Shamil banknotes (RUTS), equal to 100 Rubles, but these notes are not convertible into other currencies. Ichkeria (Chechnya Republic) reportedly planned to issue banknotes denominated in Nakhar from the National Bank of the Republic of Ichkeria, but never did so. | |||||
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"Charles Recknagel"
] | 2014-12-11T18:23:52+00:00 | As the value of Russia's ruble tumbles amid low oil global prices and Western sanctions, it is taking the currencies of many former Soviet republics down with it. | en | /Content/responsive/RFE/img/webApp/favicon.svg | RadioFreeEurope/RadioLiberty | https://www.rferl.org/a/russia-ruble-effects-neighboring-countries/26738229.html | As the value of Russia's ruble tumbles amid low oil global prices and Western sanctions, it is taking the currencies of many former Soviet republics down with it.
Just ask Gagik Ghazaryan, an exporter in Armenia. He used to be able to sell soft drinks and canned food profitably to Russia before the ruble lost 40 percent of its value relative to the U.S. dollar over the course of this year.
Today, the ruble is so weak that his Russian customers can no longer afford his products, which are priced in dollars.
"It is about two months now that we have suspended our exports," he says. "We had an order worth $1.5 million from Russia, but we cannot supply the product because the ruble has depreciated."
"Our situation is very bad," he adds. "And we don’t know how to get out of it."
He is hardly alone. As Armenian exports suddenly lose their price competitiveness in the Russian market, the entire Armenian economy is reeling. Less foreign earnings are coming in and Armenia's own currency, the dram, has fallen 12 percent against the dollar since January.
The same thing is happening next door in Georgia. Moscow may not be Tbilisi's major trading partner, as it is Yerevan's, but Russia is the single biggest source of remittances from Georgians working abroad. Now, however, the rubles they send home inject far less money into the economy than before. That has helped bring the Georgian lari down 9 percent against the dollar since January.
The drop in the Armenian and Georgian currencies create an array of problems for both countries. It means each has to pay more for badly needed imports from the West and pay more to service their foreign debt. At the same time, they must spend some of their scarce foreign currency reserves to slow the rate at which their currencies lose value if the public is to maintain faith in the nation's money.
And the two Caucasian countries are hardly the only ones to feel the effects of the weakening Russian ruble.
Hurting Across The Board
Kazakhstan, which is both a major trading partner with Russia and an oil producer in its own right, has been badly hit by both the fall of the ruble and the shrinking price of oil. Rather than try to protect the value of the Kazakh currency, the tenge, the government decided to devalue it by 19 percent in February this year. Yet even that may not be enough to keep the currency from devaluing further next year.
"If oil stays around $70 to $75 a barrel, we will be looking for growth in Russia to be, well, no growth. We would be looking for [Russian] GDP [gross domestic product] to shrink 2 to 3 percent next year," notes Charles Robertson, global chief economist at Renaissance Capital in London.
"That is going to have a negative effect on [Russia's] neighbors and all you can try and do is compensate for that by depreciating your currency."
And there is another challenge: The slipping ruble is not only making it hard for Russians to afford Kazakh goods, it also means Kazakhstan must protect its own industrial and agricultural sectors from low-cost Russian imports flooding the market.
"It's about trying to maintain the competitiveness of their non-oil sector," Robertson says.
"You don't want to see Kazakhs just buying Russian imports because the ruble has got so cheap, you want them to continue to buy Kazakh products, maybe Kazakh steel, Kazakh minerals rather than Russian minerals. So [they] are playing a role to try to protect [their] own industry when the Kazakhs let the currency move."
In different, but equally uncomfortable, circumstances is Belarus. Its currency, the ruble, has slipped some 13 percent against the dollar since the start of the year. One reason is that the slump in the Russian ruble's value has reduced revenues from Belarus's two large refineries which convert Russian crude oil into gasoline and other products for the Russian market.
And now the pressure is rising further as Minsk and Moscow engage in a trade war over charges that Belarus is acting as a backdoor for smuggling banned EU milk and meat products into Russia.
Ironically, that trade war comes as the current Customs Union between Belarus, Russia, and Kazakhstan prepares to expand into a new Eurasian Economic Union (EEU), which will include Armenia and Kyrgyzstan and begin operations January 1.
Whether Minsk and Moscow can solve their differences ahead of time remains to be seen, as does whether Moscow will help its weaker EEU partners cope with the downturn in their economies.
"In recent years, Belarus has been very dependent upon Russian financial aid and Minsk must be a little concerned that, given Russia's own problems, Moscow would be less willing to provide future financing for Belarus," says Timothy Ash, an expert on emerging European states at Standard Bank in London. "But I don't think that is necessarily the case. For both Belarus and Armenia, Russia will be very eager, I think, to prop up those countries within the Eurasian Union because it wants to send a message that the Eurasian Union is a successful entity and that members help each other."
Diminishing Remittances
Several other countries on Russia's fringes are suffering from the ruble's collapse, mainly because they have large numbers of citizens working in Russia. Moldova, Tajikistan, Kyrgyzstan, and Uzbekistan have all seen the value of remittances those migrant workers send home diminish.
The Moldovan National Bank announced on December 11 that the country's currency, the leu, lost 17 percent of its value against the dollar this year due to the devaluation of the Russian currency as well as that of Ukraine, another important economic partner.
Tajikistan's somon has dropped 5.5 percent, Kyrgyzstan's som has dropped 15 percent, and Uzbekistan's som has dropped 9 percent. The three Central Asian states, which have many citizens working as migrant laborers in Kazakhstan, have also been hit by the economic downturn in that country.
Turkmenistan, a major gas exporter, has fared better. With pipelines to Russia and Europe, to China, and to Iran, it does not depend solely on the Russian market and it has sufficient foreign currency savings to keep its manat within a narrow band against the dollar. At the same time, few Turkmen go to Russia as migrant workers, so remittances are not an issue.
Oil-rich Azerbaijan looks still more impervious to the tough new economic realities in the region. It, too, is being battered by low oil prices but has a large stabilization fund to keep its currency, the manat, within its usual band against the dollar. At the same time, most of its trade is with Turkey, not Russia.
"It is less tied in to the Russian economy, more diversified in terms of its trade and export routes, and quite closely tied to Turkey," says Ash. "It gets quite a lot of trade and benefits from investment from the Turkish economy and Turkey is obviously doing very well."
The biggest loser in the region is Ukraine. Its currency, the hryvnia, has lost 86 percent of its value against the dollar since the start of the year as the country battles pro-Russian separatists and the country's economy is in crisis. | ||||
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] | 2003-05-25T12:10:27+00:00 | en | /static/apple-touch/wikipedia.png | https://en.wikipedia.org/wiki/Russian_ruble | Currency of Russia
This article is about the currency of the modern Russian Federation. For the currencies of the Russian Empire and the Soviet Union, see Ruble.
RubleРоссийский рубль (Russian)[a]
руб, Rub
ISO 4217CodeRUB (numeric: 643)Subunit 0.01UnitUnitrublePluralThe language(s) of this currency belong(s) to the Slavic languages. There is more than one way to construct plural forms.Symbol₽DenominationsSubunit 1⁄100kopeyka (копейка)[b]Symbol kopeyka (копейка)[b]коп. or к (Cyrillic)
kop or k (Latin)Banknotes Freq. used5 ₽, 10 ₽, 50 ₽, 100 ₽, 200 ₽, 500 ₽, 1,000 ₽, 2,000 ₽, 5,000 ₽Coins Freq. used1 ₽, 2 ₽, 5 ₽, 10 ₽ Rarely used1 kop, 5 kop, 10 kop, 50 kop, 25 ₽DemographicsDate of introduction14 July 1992:
RUR (1 SUR = 1 RUR)
1 January 1998:
RUB (1,000 RUR = 1 RUB)ReplacedSoviet ruble (SUR)Official user(s)RussiaUnofficial user(s)Abkhazia, South OssetiaIssuanceCentral bankBank of Russia Websitewww .cbr .ruPrinterGoznak Websitewww .goznak .ruMintMoscow Mint and Saint Petersburg MintValuationInflation7.4% (December 2023) SourceBank of Russia MethodCPI
The ruble or rouble[c] (Russian: рубль, romanized: rublʹ; symbol: ₽; abbreviation: руб or р. in Cyrillic, Rub in Latin;[1] ISO code: RUB) is the currency of the Russian Federation. The ruble is subdivided into 100 kopecks (sometimes written as copeck or kopek; Russian: копе́йка, romanized: kopeyka, pl. копе́йки, kopeyki). It is used in Russia as well as in the parts of Ukraine under Russian military occupation and in Russian-occupied parts of Georgia.
The ruble was the currency of the Russian Empire and of the Soviet Union (as the Soviet ruble). In 1992, the currency imagery underwent a redesign as a result of the fall of the Soviet Union. The first Russian ruble (code: RUR) replaced the Soviet ruble (code: SUR) in September 1993 at par.
On 1 January 1998, preceding the Russian financial crisis, the ruble was redenominated with the new code "RUB" and was exchanged at the rate of 1 RUB = 1,000 RUR.
History
[edit]
Main article: Ruble
The ruble has been used in the Russian territories since the 14th century,[2] and is the second-oldest currency still in circulation, behind sterling.[3] Initially an uncoined unit of account, the ruble became a circulating coin in 1704 just before the establishment of the Russian Empire. It was also the first currency in Europe to be decimalised in 1704, when it was divided into 100 kopecks. The ruble has seen several incarnations and redenominations during its history, the latest of which is the introduction in 1998 of the current Russian ruble (code: RUB) at the rate of 1 RUB = 1,000 RUR.
RUR (1992–1998)
[edit]
Following the dissolution of the Soviet Union in 1991, the Soviet ruble remained the currency of the Russian Federation until 1992. A new set of coins was issued in 1992 and a new set of banknotes was issued in the name of Bank of Russia in 1993. The currency replaced the Soviet ruble at par and was assigned the ISO 4217 code RUR and number 810.
The ruble's exchange rate versus the U.S. dollar depreciated significantly from US$1 = 125 RUR in July 1992 to approximately US$1 = 6,000 RUR when the currency was redenominated in 1998.
RUR coins
[edit]
After the fall of the Soviet Union, the Russian Federation introduced new coins in 1992 in denominations of 1, 5, 10, 20, 50, and 100 rubles. The coins depict the double-headed eagle without a crown, sceptre and globus cruciger above the legend "Банк России" ("Bank of Russia"). It is exactly the same eagle that the artist Ivan Bilibin painted after the February Revolution as the coat of arms for the Russian Republic.[4] The 1 and 5-ruble coins were minted in brass-clad steel, the 10 and 20-ruble coins in cupro-nickel, and the 50 and 100-ruble coins were bimetallic (aluminium-bronze and cupro-nickel-zinc). In 1993, aluminium-bronze 50-ruble coins and cupro-nickel-zinc 100-ruble coins were issued, and the material of 10 and 20-ruble coins was changed to nickel-plated steel. In 1995 the material of 50-ruble coins was changed to brass-plated steel, but the coins were minted with the old date 1993. As high inflation persisted, the lowest denominations disappeared from circulation and the other denominations became rarely used.
During this period, the commemorative one-ruble coins were regularly issued continuing the specifications of prior commemorative Soviet rubles (31 mm diameter, 12.8 grams cupronickel). It is nearly identical to those of the 5-Swiss franc coin (31.45 mm, 13.2 g cupronickel), worth approx. €4.39 or US$5.09 as of August 2018. For this reason, there have been several instances of (now worthless) Soviet and Russian ruble coins being used on a large scale to defraud automated vending machines in Switzerland.[5]
RUR banknotes
[edit]
In 1961, new State Treasury notes were introduced for 1, 3 and 5 rubles, along with new State Bank notes worth 10, 25, 50, and 100 rubles. In 1991, the State Bank took over production of 1, 3 and 5-ruble notes and also introduced 200, 500 and 1,000-ruble notes, although the 25-ruble note was no longer issued. In 1992, a final issue of notes was made bearing the name of the USSR before the Russian Federation introduced 5,000 and 10,000-ruble notes. These were followed by 50,000-ruble notes in 1993, 100,000 rubles in 1995 and, finally, 500,000 rubles in 1997 (dated 1995).
Since the dissolution of the Soviet Union in 1991, Russian ruble banknotes and coins have been notable for their lack of portraits, which traditionally were included under both the Tsarist and Communist regimes. With the issue of the 500-ruble note depicting a statue of Peter I and then the 1,000-ruble note depicting a statue of Yaroslav, the lack of recognizable faces on the currency has been partially alleviated.
SUR and RUR series banknotes Series Value Obverse Reverse Issuer Languages 1961 1, 3, 5, 10, 25, 50, 100 rubles Vladimir Lenin or views of the Moscow Kremlin Value, and views of the Moscow Kremlin for 50 rubles or higher USSR multiple 1991 1, 3, 5, 10, 50, 100, 200, 500, 1,000 rubles Russian 1992 50, 200, 500, 1,000, 5,000, 10,000 rubles
USSR for 1,000 rubles and lower
Bank of Russia for 5,000- and 10,000 rubles
Russian 1993 100, 200, 500, 1,000, 5,000, 10,000, 50,000 rubles Moscow Kremlin with the tri-color Russian flag Bank of Russia 1995 1,000, 5,000, 10,000, 50,000, 100,000, 500,000 rubles Same design as today's banknotes, where 1 RUB = 1,000 RUR. The 1,000 ruble note did not continue as a 1 new ruble note.
RUB (1998–present)
[edit]
In 1998, the Russian ruble was redenominated with the new ISO 4217 code "RUB" and number 643 and was exchanged at the rate of 1 RUB = 1,000 RUR. All Soviet coins issued between 1961 and 1991, as well as 1-, 2- and 3-kopeck coins issued before 1961, also qualified for exchange into new rubles.[6]
The redenomination was an administrative step that reduced the unwieldiness of the old ruble[7] but occurred on the brink of the 1998 Russian financial crisis.[8] The ruble lost 70% of its value against the US dollar in the six months following this financial crisis, from US$1 = 6 ₽ to approximately 20 ₽.[9]
After stabilizing at around US$1 = 30 ₽ from 2001 to 2013, it depreciated to the range of US$1 = 60-80 ₽ from 2014 to 2021 as a result of the Annexation of Crimea by the Russian Federation in 2014 and the 2010s oil glut. After the 2022 Russian invasion of Ukraine, it declined further to US$1 = 110 ₽ due to sanctions.[10]
The ruble was subject to fluctuation when, in April 2022, the ruble went above its pre-war level after falling as low as 150 ₽ per dollar in early March,[11] with the longer-term trend showing a steady decline from mid-2022 to mid-2023, falling from 60 ₽ to 90 ₽ per dollar.[12]
On 15 July 2024 the Central Bank of the Russian Federation closed the statistics of the over-the-counter currency market,[13] and three days later the sale of ruble-note artwork on toilet paper was banned by a judge from Moscow.[14]
Symbol
[edit]
Main article: Ruble sign
Not to be confused with the Armenian letter ք.
A currency symbol was used for the ruble between the 16th century and the 18th century. The symbol consisted of the Russian letters "Р" (rotated 90° anti-clockwise) and "У" (written on top of it). The symbol was placed over the amount number it belonged to.[15] This symbol, however, fell into disuse by the mid-19th century.[16]
No official symbol was used during the final years of the Empire, nor was one introduced in the Soviet Union. The abbreviations Rbl (plural: Rbls) in Latin[17][18] and руб. (Cyrillic) and the simple characters R (Latin)[19][20][21] and р (Cyrillic) were used. These are still used today, though are unofficial.[22]
In July 2007, the Central Bank of Russia announced that it would decide on a symbol for the ruble and would test 13 symbols. This included the symbol РР (the initials of Российский Рубль "Russian ruble"), which received preliminary approval from the Central Bank.[23] However, one more symbol, a Р with a horizontal stroke below the top similar to the Philippine peso sign, was proposed unofficially.[23] Proponents of the new sign claimed that it is simple, recognizable and similar to other currency signs.[24][25][26] This symbol is also similar to the Armenian letter ք or the Latin letter Ꝑ.
On 11 December 2013, the official symbol for the ruble became , a Cyrillic letter Er with a single added horizontal stroke,[27][better source needed] though the abbreviation "руб." is in wide use.
On 4 February 2014, the Unicode Technical Committee during its 138th meeting in San Jose accepted U+20BD ₽ RUBLE SIGN symbol for Unicode version 7.0;[28] the symbol was then included into Unicode 7.0 released on 16 June 2014.[29] In August 2014, Microsoft issued updates for all of its mainstream versions of Microsoft Windows that enabled support for the new ruble sign.[30]
The ruble sign can be entered on a Russian computer keyboard as AltGr+8 on Windows and Linux, or AltGr+Р (Qwerty H position) on macOS.
Coins
[edit]
In 1998, the following coins were introduced in connection with the ruble revaluation and are currently in circulation:
Currently circulating coins[31] Image Value Technical parameters Description Years of minting Reverse Obverse Diameter Mass Composition Edge Obverse Reverse 1 kop 15.5 mm 1.5 g[32] Cupronickel-steel Plain Saint George Value
1997–2009
2014, 2017
5 kop 18.5 mm 2.6 g[32] 10 kop 17.5 mm 1.95 g[32] Brass Reeded Saint George Value 1997–2006 1.85 g Brass-plated steel Plain 2006–2015 50 kop 19.5 mm 2.90 g[32] Brass Reeded 1997–1999
2002–2006 2.75 g Brass-plated steel Plain 2006–2015 1 ₽ 20.5 mm 3.25 g Cupronickel Reeded Emblem of the Bank of Russia Value
1997–1999
2005–2009
3.00 g Nickel-plated steel 2009–2015 Coat of arms of Russia 2016–present 2 ₽ 23 mm 5.10 g Cupronickel Segmented (Plain and Reeded edges) Emblem of the Bank of Russia
1997–1999
2006–2009
5.00 g Nickel-plated steel 2009–2015 Coat of arms of Russia 2016–present 5 ₽ 25 mm 6.45 g Cupronickel-clad copper Emblem of the Bank of Russia
1997–1998
2008–2009
6.00 g Nickel-plated steel 2009–2015 Coat of arms of Russia 2016–present 10 ₽ 22 mm 5.63 g Brass-plated steel Segmented (plain and reeded edges) Emblem of the Bank of Russia Value 2009–2013, 2015 Coat of arms of Russia 2016–present
Kopeck coins are rarely used due to their low value and in some cases may not be accepted by stores or individuals.
These coins were issued starting in 1998, although some of them bear the year 1997. Kopeck denominations all depict St George and the Dragon, and all ruble denominations (with the exception of commemorative pieces) depict the double headed eagle. Mint marks are denoted by "СП" or "M" on kopecks and the logo of either the Saint Petersburg or Moscow mint on rubles. Since 2000, many bimetallic 10 ₽ circulating commemorative coins have been issued. These coins have a unique holographic security feature inside the "0" of the denomination 10.[citation needed]
In 2008, the Bank of Russia proposed withdrawing 1 and 5 kopeck coins from circulation and subsequently rounding all prices to multiples of 10 kopeks, although the proposal has not been realized yet (though characteristic "x.99" prices are treated as rounded in exchange).[citation needed] The Bank of Russia stopped minting one-kopeck and five-kopeck coins in 2012, and kopecks completely in 2018.[33]
The material of 1 ₽, 2 ₽ and 5 ₽ coins was switched from copper-nickel-zinc and copper-nickel clad to nickel-plated steel in the second quarter of 2009. 10 and 50 kopecks were also changed from brass to brass-plated steel.[citation needed]
In October 2009, a new 10 ₽ coin made of brass-plated steel was issued, featuring optical security features.[34] The 10 ₽ banknote would have been withdrawn in 2012, but a shortage of 10 ₽ coins prompted the Central Bank to delay this and put new ones in circulation.[35] Bimetallic commemorative 10-ruble coins will continue to be issued.[citation needed]
A series of circulating Olympic commemorative 25 ₽ coins started in 2011. The new coins are struck in cupronickel.[36] A number of commemorative smaller denominations of these coins exist in circulation as well, depicting national historic events and anniversaries.
The Bank of Russia issues other commemorative non-circulating coins ranging from 1 ₽ to 50,000 ₽.[37]
Banknotes
[edit]
On 1 January 1998, a new series of banknotes dated 1997 was released in denominations of 5 ₽, 10 ₽, 50 ₽, 100 ₽ and 500 ₽. The 1,000 ₽ banknote was first issued on 1 January 2001 and the 5,000 ₽ banknote was first issued on 31 July 2006. Modifications to the series were made in 2001, 2004, and 2010.
In April 2016, the Central Bank of Russia announced that it will introduce two new banknotes – 200 ₽ and 2,000 ₽ — in 2017.[38] In September 2016, a vote was held to decide which symbols and cities will be displayed on the new notes.[39] In February 2017, the Central Bank of Russia announced the new symbols. The 200 ₽ banknote will feature symbols of Crimea: the Monument to the Sunken Ships, a view of Sevastopol, and a view of Chersonesus. The 2,000 ₽ banknote will bear images of the Russian Far East: the bridge to Russky Island and the Vostochny Cosmodrome in the Amur Oblast.[40]
In 2018, the Central Bank issued a 100 ₽ "commemorative" banknote designed to recognize Russia's role as the host of the 2018 World Cup soccer tournament. The banknote is printed on a polymer substrate, and has several transparent portions as well as a hologram. Despite the note being intended for legal tender transactions, the Central Bank has simultaneously refused to allow the country's automated teller machines (ATMs) to recognize or accept it.[41]
In March 2021, the Central Bank announced plans to gradually update the designs of the 10 ₽, 50 ₽, 100 ₽, 1,000 ₽ and 5,000 ₽ banknotes and make them more secure; this is expected to be completed in 2025.[42]
The first new design, for the 100 ₽ note, was unveiled on 30 June 2022.[43] The design of the new note includes symbols of Moscow on the obverse - Red Square, Zaryadye Park, Moscow State University on Sparrow Hills, and Ostankino Tower - and the Rzhev Memorial to the Soviet Soldier on the reverse.[44]
In late 2022, the Central Bank resumed the printing of 5-ruble and 10-ruble notes for circulation; freshly printed notes began appearing in 2023.[45]
1997 series[46] Image Value Dimensions Description Dates Obverse Reverse Town Obverse Reverse Watermark Printing* Issue Withdrawal Lapse 5 ₽ 137 × 61 mm Veliky Novgorod The Millennium of Russia monument on background of Saint Sophia Cathedral Fortress wall of the Novgorod Kremlin "5", Saint Sophia Cathedral 1997
2022
1 January 1998 Current, but not issued from 2001 until 2021.
Re-issued in 2022. Rarely seen in circulation. Returned to circulation in 2023.[45]
10 ₽ 150 × 65 mm Krasnoyarsk Kommunalny Bridge across the Yenisei River, Paraskeva Pyatnitsa Chapel Krasnoyarsk hydroelectric plant "10", Paraskeva Pyatnitsa Chapel
1997
2001
2004
2022
Current, but not issued from 2010 to 2021.
Re-issued in 2022. Still in use, but rarely seen in circulation. Returned to circulation in 2023.[45]
50 ₽ Saint Petersburg A Rostral Column sculpture on background of Peter and Paul Fortress Old Saint Petersburg Stock Exchange and Rostral Columns "50", Peter and Paul Cathedral Current 100 ₽ Moscow Quadriga statue on the portico of the Bolshoi Theatre The Bolshoi Theatre "100", The Bolshoi Theatre 500 ₽ Arkhangelsk Monument to Czar Peter the Great, sailing ship and sea terminal[47] Solovetsky Monastery "500", portrait of Peter the Great
1997
2001
2004
2010
1,000 ₽ 157 × 69 mm Yaroslavl Monument to Yaroslav I the Wise and the Lady of Kazan Chapel John the Baptist Church "1,000", portrait of Yaroslav the Wise
2001
2004
2010
1 January 2001 5,000 ₽ Khabarovsk Monument to Nikolay Muravyov-Amursky Khabarovsk Bridge over the Amur "5,000", portrait of Muravyov-Amursky
2006
2010
31 July 2006 These images are to scale at 0.7 pixel per millimetre. For table standards, see the banknote specification table.
Each new banknote series has enhanced security features, but no major design changes. Banknotes printed after 1997 bear the fine print "модификация 2001г." (or later date) meaning "modification of year 2001" on the left watermark area.
2017–2025 series[46] Image Value Dimensions Description Date of Obverse Reverse Federal District Obverse Reverse Watermark printing issue withdrawal lapse 100 ₽ 150 × 65 mm Central Federal District Moscow: Spasskaya Tower, Zaryadye Park, Moscow State University, Ostankino Tower Memorial to the Soviet Soldier, Rzhev, Tver Oblast; Kulikovo Field, Tula Oblast "100", Spasskaya Tower 2022 30 June 2022 Current 200 ₽ 150 × 65 mm Southern Federal District Monument to the Sunken Ships (by sculptor Amandus Adamson), Sevastopol View of Chersonesus "200", Monument to the Sunken Ships 2017 12 October 2017 1,000 ₽ 157 × 69 mm Volga Federal District Nizhny Novgorod: Nikolskaya Tower of the Nizhny Novgorod Kremlin, Nizhny Novgorod Fair, Spit of Nizhny Novgorod, Nizhny Novgorod Stadium Museum of the History of Statehood of the Tatar People and the Republic of Tatarstan in Kazan, Söyembikä Tower on the Kazan Kremlin, Museum of Archeology and Ethnography in Ufa "1000", Nikolskaya Tower of the Nizhny Novgorod Kremlin 2023 16 October 2023 2,000 ₽ 157 × 69 mm Far Eastern Federal District Vladivostok: Russky Bridge, Far Eastern Federal University Vostochny Cosmodrome, Tsiolkovsky, Amur Oblast "2000", Russky Bridge 2017 12 October 2017 5,000 ₽ 157 × 69 mm Ural Federal District Yekaterinburg: Stele "Europe - Asia", Iset Tower in Yekaterinburg-City, Vysotsky, Yekaterinburg Circus, House of Communications (main post office building), Palace of Sporting Games, Sevastyanov's House Monument "Tale of the Urals" in Chelyabinsk, metallurgical plant, stele "66 parallel" (Arctic Circle) in Salekhard, oil and gas industry facilities "5000", House of Communications (main post office building), Sevastyanov's House 2023 16 October 2023
For the rest of the 2017–2025 series, the following designs are planned:[48]
10 ₽ (2025): Novosibirsk on the obverse, Siberian Federal District on the reverse
50 ₽ (2025): Saint Petersburg on the obverse, Northwestern Federal District on the reverse
500 ₽ (2024): Pyatigorsk on the obverse, North Caucasian Federal District on the reverse.
Printing
[edit]
All Russian ruble banknotes are currently printed at the state-owned factory Goznak in Moscow, which was founded on 6 June 1919 and operated ever since. Coins are minted in the Moscow Mint and at the Saint Petersburg Mint, which has been operating since 1724.
100 ₽ note controversy
[edit]
On 8 July 2014, State Duma deputy and vice-chairman of the Duma Regional Political Committee Roman Khudyakov alleged that the image of the Greek god Apollo driving a Quadriga on the portico of the Bolshoi Theatre in Moscow on the 100 ₽ banknote constitutes pornography that should only be available to persons over the age of 18. Since it is impractical to limit the access of minors to banknotes, he requested in his letter to the Governor of the Bank of Russia Elvira Nabiullina to immediately change the design of the banknote.[49]
Khudyakov, a member of parliament for the LDPR party stated, "You can clearly see that Apollo is naked, you can see his genitalia. I submitted a parliamentary request and forwarded it directly to the head of the central bank asking for the banknote to be brought into line with the law protecting children and to remove this Apollo."[50][51] Khudyakov's efforts did not lead to any changes being made to the design.
Crimea controversy
[edit]
On 13 October 2017, the National Bank of Ukraine issued a decree forbidding the country's banks, other financial institutions and Ukraine's state postal service to circulate Russian banknotes which use images of Crimea, a territory that is regarded as Russian-occupied by Ukraine and whose annexation by Russia is not recognised by most UN member states.[52] The NBU stated that the ban applies to all financial operations, including cash transactions, currency exchange activities and interbank trade.[53] Crimea is featured on three banknotes that are currently in circulation – the 100 ₽ commemorative notes issued in 2015 and 2018, as well as the 200 ₽ note issued in 2017.
1,000 ₽ note controversy
[edit]
On 16 October 2023, the day of unveilling of the new design of the 1,000-ruble note, the design of the note was criticised by the Russian Orthodox Church for displaying the Islamic crescent on one of the buildings on the reverse of the note at the same time as excluding the Orthodox cross from a different building (a former church that is now a museum).[54] The Bank of Russia claimed that the image was not selected to provoke or disregard any faith, but announced on the following day that the design would be revised and the notes would not be printed.[citation needed]
Effect of international sanctions
[edit]
Kommersant reported that the new 100 ₽ note introduced in 2022 will not work with an estimated 60% of cash registers and bank machines because they are imported and therefore must be updated by foreign companies, and this work may not be completed due to sanctions.[55][56] However, Russian banks have been transferring their ATM networks to domestic software which does not require foreign specialists since at least 2018, with the biggest Russian bank, Sberbank, completing 80% of the transfer by June 2022.[57] Russian banks will start purchasing domestic ATMs with Elbrus processors in 2023, the mandatory share of Russian products in the purchase of ATMs was to be at least 18% for banks with state partnership, since 2022 it has grown to 20%.[58]
Commemorative banknotes
[edit]
Commemorative banknote series[59] Image Value Dimensions Description Dates Obverse Reverse Obverse Reverse Watermark Printing* Issue Withdrawal Lapse 100 ₽ 150 × 65 mm A snowboarder and some of the Olympic venues of the Sochi coastal cluster. Fisht Olympic Stadium in Sochi, firebird 2014 Winter Olympics logo 2014 30 October 2013 Current 100 ₽ 150 × 65 mm Monument to the Sunken Ships in Sevastopol Bay, outlines of Monument to the heroes of the Second Siege of Sevastopol and St. Vladimir Cathedral, fragment of a painting by Ivan Aivazovsky Swallow's Nest castle, Yevpatoria RT-70 radio telescope, outline of Big Khan Mosque in Bakhchisaray and a green stripe containing a QR code linking to the Bank of Russia webpage containing historical information relating to the commemorative banknote Portrait of Empress Catherine the Great 2015 23 December 2015 100 ₽ 150 × 65 mm A boy with a ball under his arm looking up as Lev Yashin saves a ball. A stylized image of the globe in the form of a football with a green image of Russia's territory (including Crimea) outlined on it, as well as the name of the 2018 FIFA World Cup host cities The number 2018 2018 22 May 2018
On 30 October 2013, a special banknote in honour of the 2014 Winter Olympics held in Sochi was issued. The banknote is printed on high-quality white cotton paper. A transparent polymer security stripe is embedded into the paper to make a transparent window incorporating an optically variable element in the form of a snowflake. The highlight watermark is visible in the upper part of the banknote. Ornamental designs run vertically along the banknote. The front of the note features a snowboarder and some of the Olympic venues of the Sochi coastal cluster. The back of the note features the Fisht Olympic Stadium in Sochi. The predominant colour of the note is blue.
On 23 December 2015, another commemorative 100 ₽ banknote was issued to celebrate the "reunification of Crimea and Russia". The banknote is printed on light-yellow-coloured cotton paper. One side of the note is devoted to Sevastopol, the other one — to Crimea. А wide security thread is embedded into the paper. It comes out on the surface on the Sevastopol side of the banknote in the figure-shaped window. A multitone combined watermark is located on the unprinted area in the upper part of the banknote. Ornamental designs run vertically along the banknote. The Sevastopol side of the note features the Monument to Sunken Ships in Sevastopol Bay and a fragment of the painting "Russian Squadron on the Roads of Sevastopol" by Ivan Aivazovsky. The Crimea side of the note features the Swallow's Nest, a decorative castle and local landmark. In the lower part of the Sevastopol side of the banknote in the green stripe there is a QR-code containing a link to the Bank of Russia's webpage, which lists historical information related to the banknote. The predominant colour of the note is olive green.
On 22 May 2018, a special banknote to celebrate the 2018 FIFA World Cup was issued.[60] The banknote is printed on polymer. The top part of the note bears a transparent window that contains a holographic element. The design of the note is vertically oriented. The main images of the obverse are a boy with a ball under his arm and a goalkeeper diving for a ball. The main image of the reverse is a stylized image of the globe in the form of a football with green image of the Russian territory outlined on it. On the reverse there is the number 2018 that marks both the issue of the banknote and the World Cup, as well as the name of the host cities in the Russian language. The bottom right corner of the obverse bears a QR-code, which contains a link to the page of the Bank of Russia website with the description of the note's security features. Predominant colours of the note are blue and green.
Economics
[edit]
The use of other currencies for transactions between Russian residents is punishable, with a few exceptions, with a fine of 75% to 100% of the value of the transaction.[61]
International trade
[edit]
On 23 November 2010, at a meeting of Russian Prime Minister Vladimir Putin and Chinese Premier Wen Jiabao, it was announced that Russia and China had decided to use their own national currencies for bilateral trade, instead of the US dollar. The move is aimed to further improve relations between Beijing and Moscow and to protect their domestic economies during the Great Recession. The trading of the Chinese yuan against the ruble has started in the Chinese interbank market, while the yuan's trading against the ruble was set to start on the Russian foreign exchange market in December 2010.[62][better source needed]
In January 2014, President Putin said there should be a sound balance on the ruble exchange rate; that the Central Bank only regulated the national currency exchange rate when it went beyond the upper or lower limits of the floating exchange rate; and that the freer the Russian national currency is, the better it is, adding that this would make the economy react more effectively and timely to processes taking place in it.[63]
Exchange rates
[edit]
Current RUB exchange rates From Google Finance: AUD CAD CHF CNY EUR GBP HKD JPY USD From Yahoo! Finance: AUD CAD CHF CNY EUR GBP HKD JPY USD From XE.com: AUD CAD CHF CNY EUR GBP HKD JPY USD From OANDA: AUD CAD CHF CNY EUR GBP HKD JPY USD
The first Russian ruble (RUR) introduced in January 1992 depreciated significantly versus the US dollar from US$1 = 125 RUR to around US$1 = 6,000 RUR (or 6 RUB) when it was redenominated in January 1998. The new ruble then depreciated rapidly in its first year to US$1 = 20 RUB before stabilizing at around US$1 = 30 RUB from 2001 to 2013.
The financial crisis in Russia in 2014–2016 was the result of the collapse of the Russian ruble beginning in the second half of 2014.[64][65][66][67][68][69] A decline in confidence in the Russian economy caused investors to sell off their Russian assets, which led to a decline in the value of the Russian ruble and sparked fears of a Russian financial crisis. The lack of confidence in the Russian economy stemmed from at least two major sources. The first is the fall in the price of oil in 2014. Crude oil, a major export of Russia, declined in price by nearly 50% between its yearly high in June 2014 and 16 December 2014. The second was the result of international economic sanctions imposed on Russia following Russia's annexation of Crimea and the Russian military intervention in Ukraine.[64][70]
The crisis affected the Russian economy, both consumers and companies, and regional financial markets, as well as Putin's ambitions regarding the Eurasian Economic Union. The Russian stock market in particular experienced large declines, with a 30% drop in the RTS Index from the beginning of December through 16 December 2014. From July 2014 to February 2015 the ruble fell dramatically against the U.S. dollar. A 6.5 percentage point interest rate rise to 17 percent[71] failed to prevent the currency hitting record lows in a "perfect storm" of low oil prices, looming recession and international sanctions over the Russo-Ukrainian War.[72]
Russia faced steep economic sanctions due to the invasion of Ukraine in early 2022. In response to the military campaign, several countries imposed strict economic sanctions on the Russian economy.[d] This led to a 32 percent drop in the value of the ruble, which traded at an exchange rate of 120 rubles per dollar in March 2022.[10] On 23 March 2022, President Putin announced that Russia would only accept payments for Russian gas exports from “unfriendly countries” in rubles.[73] This, along with several other actions to control capital flow, coinciding with soaring commodity prices led to the ruble rallying to a record high in May 2022 that economists feel is unlikely to last.[74] However, the ruble continued to rally in June 2022, hitting its highest point (51 rubles to the dollar) for the past seven years at the end of the month.[75]
RUB per US$1998–2023 Year Lowest ↓ Highest ↑ Average Date Rate Date Rate Rate 1998 1 January 5.9600 29 December 20.9900 9.7945 1999 1 January 20.6500 29 December 27.0000 24.6489 2000 6 January 26.9000 23 February 28.8700 28.1287 2001 4 January 28.1600 18 December 30.3000 29.1753 2002 1 January 30.1372 7 December 31.8600 31.3608 2003 20 December 29.2450 9 January 31.8846 30.6719 2004 30 December 27.7487 1 January 29.4545 28.8080 2005 18 March 27.4611 6 December 28.9978 28.1910 2006 6 December 26.1840 12 January 28.4834 27.1355 2007 24 November 24.2649 13 January 26.5770 25.5808 2008 16 July 23.1255 31 December 29.3804 24.8529 2009 13 November 28.6701 19 February 36.4267 31.7403 2010 16 April 28.9310 8 June 31.7798 30.3679 2011 6 May 27.2625 5 October 32.6799 29.3823 2012 28 March 28.9468 5 June 34.0395 31.0661 2013 5 February 29.9251 5 September 33.4656 31.9063 2014 1 January 32.6587 18 December 67.7851 38.6025 2015 17 April 49.6749 31 December 72.8827 61.3400 2016 30 December 60.2730 22 January 83.5913 66.8336 2017 26 April 55.8453 4 August 60.7503 58.2982 2018 28 February 55.6717 12 September 69.9744 62.9502 2019 26 December 61.7164 15 January 67.1920 64.6184 2020 10 January 61.0548 18 March 80.8692 72.4388 2021 27 October 69.5526 8 April 77.7730 73.6628 2022 30 June 51.1580 11 March 120.3785 68.4869 2023 15 January 66.0026 8 October 101.0001 85.5086 Source: USD exchange rates in RUB, Bank of Russia[76]
Most traded currencies by value
Currency distribution of global foreign exchange market turnover[77] Rank Currency ISO 4217
code Symbol or
abbreviation Proportion of daily volume Change
(2019–2022) April 2019 April 2022 1 U.S. dollar USD US$ 88.3% 88.5% 0.2pp 2 Euro EUR € 32.3% 30.5% 1.8pp 3 Japanese yen JPY ¥ / 円 16.8% 16.7% 0.1pp 4 Sterling GBP £ 12.8% 12.9% 0.1pp 5 Renminbi CNY ¥ / 元 4.3% 7.0% 2.7pp 6 Australian dollar AUD A$ 6.8% 6.4% 0.4pp 7 Canadian dollar CAD C$ 5.0% 6.2% 1.2pp 8 Swiss franc CHF CHF 4.9% 5.2% 0.3pp 9 Hong Kong dollar HKD HK$ 3.5% 2.6% 0.9pp 10 Singapore dollar SGD S$ 1.8% 2.4% 0.6pp 11 Swedish krona SEK kr 2.0% 2.2% 0.2pp 12 South Korean won KRW ₩ / 원 2.0% 1.9% 0.1pp 13 Norwegian krone NOK kr 1.8% 1.7% 0.1pp 14 New Zealand dollar NZD NZ$ 2.1% 1.7% 0.4pp 15 Indian rupee INR ₹ 1.7% 1.6% 0.1pp 16 Mexican peso MXN MX$ 1.7% 1.5% 0.2pp 17 New Taiwan dollar TWD NT$ 0.9% 1.1% 0.2pp 18 South African rand ZAR R 1.1% 1.0% 0.1pp 19 Brazilian real BRL R$ 1.1% 0.9% 0.2pp 20 Danish krone DKK kr 0.6% 0.7% 0.1pp 21 Polish złoty PLN zł 0.6% 0.7% 0.1pp 22 Thai baht THB ฿ 0.5% 0.4% 0.1pp 23 Israeli new shekel ILS ₪ 0.3% 0.4% 0.1pp 24 Indonesian rupiah IDR Rp 0.4% 0.4% 25 Czech koruna CZK Kč 0.4% 0.4% 26 UAE dirham AED د.إ 0.2% 0.4% 0.2pp 27 Turkish lira TRY ₺ 1.1% 0.4% 0.7pp 28 Hungarian forint HUF Ft 0.4% 0.3% 0.1pp 29 Chilean peso CLP CLP$ 0.3% 0.3% 30 Saudi riyal SAR ﷼ 0.2% 0.2% 31 Philippine peso PHP ₱ 0.3% 0.2% 0.1pp 32 Malaysian ringgit MYR RM 0.2% 0.2% 33 Colombian peso COP COL$ 0.2% 0.2% 34 Russian ruble RUB ₽ 1.1% 0.2% 0.9pp 35 Romanian leu RON L 0.1% 0.1% 36 Peruvian sol PEN S/ 0.1% 0.1% 37 Bahraini dinar BHD .د.ب 0.0% 0.0% 38 Bulgarian lev BGN BGN 0.0% 0.0% 39 Argentine peso ARS ARG$ 0.1% 0.0% 0.1pp … Other 1.8% 2.3% 0.5pp Total[e] 200.0% 200.0%
See also
[edit]
Belarusian ruble
Transnistrian ruble
Ruble (disambiguation), various historic and modern rubles.
Notes
[edit]
References
[edit]
Citations
[edit]
Sources
[edit] | ||||||
9245 | dbpedia | 3 | 10 | https://www.globalexchange.com.jm/en/currencies-of-the-world/russian-ruble | en | Russian Ruble | https://www.globalexchange.com.jm/documents/20151/31618/favicon.png/54a53a66-bc81-dbec-5206-5cee30bb0cd9?t=1667562804900 | https://www.globalexchange.com.jm/documents/20151/31618/favicon.png/54a53a66-bc81-dbec-5206-5cee30bb0cd9?t=1667562804900 | [
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""
] | null | [] | null | en | https://www.globalexchange.com.jm/documents/20151/31618/favicon.png/54a53a66-bc81-dbec-5206-5cee30bb0cd9?t=1667562804900 | https://www.globalexchange.com.jm/es/monedas-del-mundo/rublo-ruso | The rouble became the currency of Russia 500 years ago and it is subdivided into 100 kopeks.
Origins and history
The origins of the rouble date back to 1704, when Peter the Great standardised this coin to 28 grams of silver. On 17th December 1885 a new standard that did not change the silver rouble but reduced the gold content to 1161 grams was adopted.
Later on, during the reign of Nicholas I, the silver rouble was declared as monetary unit and main instrument of payment. Banknotes, on the other hand, were to become a supporting instrument of payment.
Despite the reforms, innovations and trials undergone by the rouble, the currency did not lose value until the Russian Revolution in 1917.
During the dissolution of the Soviet Union in 1991, the Russian currency experienced a modification in its design. At this time, the Central Bank of the Soviet Union (Gosbank) put in circulation new banknotes and coins, which were also issued by the Russian Bank in 1992. That very same year, the Bank of Russia issued its first series of Russian rouble banknotes with a nominal value of 5,000 and 10,000 roubles.
In 1993 there was a new reform that, along with the new banknotes issued, would put a stop to the circulation of soviet models.
In March 2014 the Russian rouble was introduced into the Republic of Crimea and the federal city of Sevastopol, after their annexation to the Russian Federation.
Current Russian rouble banknotes and coins
Today, banknotes in denominations of 5, 10, 50, 100, 500, 1000 and 5000 Russian roubles are in circulation.
Regarding coins, denominations of 1, 5, 10 and 50 kopeks, and 1, 2, 5 and 10 roubles are in use. | ||||
9245 | dbpedia | 0 | 53 | https://carnegieendowment.org/posts/2017/03/the-formation-and-evolution-of-the-soviet-unions-oil-and-gas-dependence%3Flang%3Den | en | Carnegie Endowment for International Peace | https://carnegieendowment.org/favicon.ico | https://carnegieendowment.org/favicon.ico | [] | [] | [] | [
""
] | null | [] | null | en | /favicon.ico | null | |||||
9245 | dbpedia | 1 | 33 | https://fortune.com/europe/2023/10/12/russian-rouble-surge-putin-capital-control-foreign-currency-revenue/ | en | Russian ruble surges after Putin ordered 43 companies to prop up the slumping currency by selling some of their foreign cash | [
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"Prarthana Prakash",
"Ryan Hogg",
"Chris Morris",
"Orianna Rosa Royle",
"Phil Wahba",
"Sydney Lake"
] | 2023-10-12T00:00:00 | The Russian central bank endorsed the move to save the ruble and improve liquidity after months of pushback against President Putin's capital controls. | en | /icons/favicons/favicon.ico | Fortune Europe | https://fortune.com/europe/2023/10/12/russian-rouble-surge-putin-capital-control-foreign-currency-revenue/ | The Bank of Russia has endorsed the move, according to Reuters, after months of pushing back and favoring instead the adoption of higher interest rates to curb the ruble’s devaluation. It said the measures could prop up the fluctuating currency and improve liquidity.
Putin signed a decree Wednesday meant for Russian export companies—43 of them in total across energy, agriculture, and other sectors—to sell some of their foreign currency revenues on domestic markets in exchange for rubles to help bolster Russia’s currency.
“The main purpose of these measures is to create long-term conditions for increasing the transparency and predictability of the currency market, [and] to reduce the opportunity for currency speculation,” the Russian First Deputy Prime Minister Andrei Belousov said in a statement, CNN reported.
The move has helped the ruble inch up against the U.S. dollar by roughly 4%, hitting a two-week high. But the currency remains significantly lower—about 23% down this year.
The ruble trouble started shortly after Russia invaded Ukraine last February, which prompting a slew of Western sanctions ultimately resulting in an all-time low of 120 rubles against the U.S. dollar. At that time, the Kremlin also introduced capital controls, making exporters exchange at least 80% of foreign currency revenues in the form of U.S. dollars, euros or other currencies, for roubles. Three months later, the threshold was dropped to 50% before it was scratched altogether.
Russia policymakers have been on edge as the currency neared the psychological threshold of 100 rubles to a dollar last week. The ruble actually crossed that barrier in August, sparking an emergency central bank meeting, a series of rate hikes amounting to 550 basis points, and a decision to halt foreign currency purchases on the domestic markets over the following months.
Despite the Kremlin’s efforts to shore up the ruble, the currency continues to remain under pressure due to capital outflows and poor exports. Putin has acknowledged the pressures amid soaring inflation.
But some experts see this measure as a possible path to the ruble regaining some of its strength relative to the dollar.
“If the parameters of our export goods remain the same…some more strengthening is possible,” Herman Gerf, CEO of Russian lender Sberbank said, according to TASS news agency, Reuters reported. “The regular, fundamental exchange rate today is 85–90 per dollar.” | ||||
9245 | dbpedia | 2 | 89 | https://www.bloomberg.com/news/articles/2024-06-13/usd-rub-after-us-dollar-trade-sanctions-russians-look-to-yuan-cny | en | Russians See Little Fallout After US Sanctions Hit Dollar Exchange Trade | [
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] | null | [] | 2024-06-13T00:00:00 | The latest round of US sanctions effectively ended three decades of daily exchange trading in the dollar for Russia’s ruble that first began in the twilight of the Soviet Union. Russians mostly took the news in stride. | en | Bloomberg.com | https://www.bloomberg.com/news/articles/2024-06-13/usd-rub-after-us-dollar-trade-sanctions-russians-look-to-yuan-cny | The latest round of US sanctions effectively ended three decades of daily exchange trading in the dollar for Russia’s ruble that first began in the twilight of the Soviet Union. Russians mostly took the news in stride.
The Moscow Exchange from Thursday halted trading on several markets involving dollars and euros after the company, also known as Moex, was targeted along with its settlement depository unit under US restrictions aimed at further isolating Moscow from the international financial system over its war in Ukraine. The UK followed the US with sanctions on the exchange. | |||||
9245 | dbpedia | 1 | 64 | https://www.rferl.org/a/russia-plunging-ruble-crisis-confidence-policy-ukraine-war/32551217.html | en | 'Crisis Of Confidence': Ruble's Plunge Prompts Policy Clash In Russia As Costly War Drags On | [
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] | 2023-08-16T19:20:58+00:00 | The ruble has been falling as Russia’s war on Ukraine drags on with no sign that Moscow intends to pull back. While there are underlying causes such as shrinking net exports, some experts also see a ‘crisis of confidence’ in the currency and its plunge has set off a tug-of-war over economic policy. | en | /Content/responsive/RFE/img/webApp/favicon.svg | RadioFreeEurope/RadioLiberty | https://www.rferl.org/a/russia-plunging-ruble-crisis-confidence-policy-ukraine-war/32551217.html | When Russia’s central bank surprised economists on July 21 by hiking interest rates a full percentage point, double the expected increase, it should have buoyed the ruble -- which had been on a downward trajectory since December.
Yet the Russian currency continued to tumble against the U.S. dollar the following three weeks, breaching the important psychological level of 100 on August 14 and prompting a whopping 3.5 percentage point emergency rate hike the following day, to 12 percent.
The latest slide in the ruble comes even as Russian oil, its main source of foreign currency revenue, is fetching higher prices. Higher oil prices and a stronger ruble have often gone hand in hand, but not this time: Russia’s invasion of Ukraine has warped the country’s own economy, laying land mines for the currency.
“There is a crisis of confidence in the ruble,” Sergei Aleksashenko, a former Russian central bank chief who is now a vocal Kremlin critic, said in a tweet following the August 15 rate hike. He predicted rate increases would have little impact on the currency.
The ruble’s monthslong decline comes against the backdrop of the grinding war in Ukraine, where Russia’s forces have made few gains since the first months after the full-scale invasion in February 2022 and are facing a Ukrainian counteroffensive in both the east and south.
That fierce Ukrainian resistance is forcing Russia to ramp up military spending as Western sanctions crimp energy export revenue, creating a large budget deficit that is putting pressure on the ruble exchange rate.
Meanwhile, Russian industrial and consumer demand for imported machinery, technology, and other goods has jumped, spurring demand for dollars and euros that are harder to come by.
The ruble’s weakness is putting President Vladimir Putin in a tight spot, economists say. He needs to rein in spending if he wants to tame inflation and stabilize the ruble.
But Putin has repeatedly signaled that he intends to keep the invasion going indefinitely, and the next presidential election is coming up in March – with Putin sure to win if he runs, as expected, due to the Kremlin’s control over politics and the media. Yet, he needs to shore up his image following the brief but embarrassing mutiny by the Wagner mercenary group in June and continuing setbacks in the war.
As a result, he is unlikely to curtail military or social spending in any meaningful way, thus shifting the burden of protecting the ruble to the central bank.
“There is a tug-of-war taking place in Russia right now between President Putin’s military ambitions on the one hand and the policy objectives of the central bank and finance ministry on the other,” Liam Peach, an economist at London-based research firm Capital Economics, said in an August 15 note.
That struggle was on stark display ahead of the sharp rate hike, adding to signs of tension within the ruling elite over strains on the economy and society as the war persists.
In a column published by the state news agency TASS on August 14, Putin’s economic adviser, Maksim Oreshkin, laid into the central bank without actually naming the bank or its chief, Elvira Nabiullina, writing that “the source of the weakening of the ruble and the acceleration of inflation is soft monetary policy.”
Nabiullina, who is highly respected abroad and is credited with minimizing the damage to Russia’s economy in just over a decade as central bank chief, has pointed to the decline in foreign trade as the main cause of the ruble’s weakness and has indicated that increased state spending and labor shortages resulting from the war have fueled inflation. Experts have sided with her in the debate.
Regardless, Nabiullina’s job won’t be easy. The West has frozen an estimated $300 billion in Russian central bank foreign currency reserves, shunned investment in the country, and put a price cap on its oil exports, limiting policymakers’ ability to support the ruble, Peach said.
During periods of currency weakness prior to the full-scale invasion of Ukraine and the sanctions that followed, the central bank could sell billions of dollars in foreign currency reserves to shore up the ruble -- or Western investors, believing the currency was undervalued, could snap it up.
Peach said the risks to Russia’s economic stability are materializing faster than he anticipated. He now expects the central bank to raise the rate by another 2 percentage points before the end of the year, to 14 percent.
Higher rates crimp corporate and consumer borrowing, leading to slower inflation, and make ruble deposits a more attractive investment.
“The next few months are likely to be characterized by further falls in the ruble, and much higher inflation and interest rates,” he said.
'Normal Rules Do Not Apply'
Chris Weafer, the founder of Macro-Advisory, a consulting firm focusing on the countries of the former Soviet Union, told RFE/RL that the weak ruble is not a foreboding sign of a brewing financial crisis “because it is a managed currency in a managed economy. The normal rules do not apply.”
The ruble had been a free-floating currency prior to the February 2022 invasion. The central bank has been managing it with the help of currency controls since March 2022, when the West imposed sweeping financial sanctions on the country, Weafer said.
He said the central bank and the Finance Ministry wanted to weaken ruble following its sharp rally in 2022 in order to help narrow the budget deficit. However, “they let it slip too far” and were now being instructed “from on high” to reel it back in.
The ruble reached a seven-year high of 53 to the dollar in June 2022 as surging oil and gas prices generated a foreign currency windfall just as imports collapsed due to the Western sanctions.
The Russian budget receives more ruble tax revenue from exporters when the ruble exchange rate is lower, but a sharp drop relative to other currencies also leads to an acceleration of inflation as imports become more expensive in rubles.
The Russian currency has fallen as much as 30 percent this year and by nearly half since the June 2022 peak as oil and gas export revenue plunged and imports surged.
Weafer said the August 15 rate hike was meant to send a message that “the central bank is in control and wants the ruble to recover.”
Tatiana Orlova, an economist at Oxford Economics in Britain, told RFE/RL on August 15 that the central bank may need to resort to capital controls to stabilize the ruble. She said it could force exporters to sell their foreign currency or limit the amount of foreign currency citizens can send overseas. | ||||
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9245 | dbpedia | 1 | 25 | https://www.globocambio.co/en/currencies-of-the-world/russian-ruble | en | Russian Ruble | https://www.globocambio.co/documents/20151/31618/favicon.png/54a53a66-bc81-dbec-5206-5cee30bb0cd9?t=1667562804900 | https://www.globocambio.co/documents/20151/31618/favicon.png/54a53a66-bc81-dbec-5206-5cee30bb0cd9?t=1667562804900 | [
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Origins and history
The origins of the rouble date back to 1704, when Peter the Great standardised this coin to 28 grams of silver. On 17th December 1885 a new standard that did not change the silver rouble but reduced the gold content to 1161 grams was adopted.
Later on, during the reign of Nicholas I, the silver rouble was declared as monetary unit and main instrument of payment. Banknotes, on the other hand, were to become a supporting instrument of payment.
Despite the reforms, innovations and trials undergone by the rouble, the currency did not lose value until the Russian Revolution in 1917.
During the dissolution of the Soviet Union in 1991, the Russian currency experienced a modification in its design. At this time, the Central Bank of the Soviet Union (Gosbank) put in circulation new banknotes and coins, which were also issued by the Russian Bank in 1992. That very same year, the Bank of Russia issued its first series of Russian rouble banknotes with a nominal value of 5,000 and 10,000 roubles.
In 1993 there was a new reform that, along with the new banknotes issued, would put a stop to the circulation of soviet models.
In March 2014 the Russian rouble was introduced into the Republic of Crimea and the federal city of Sevastopol, after their annexation to the Russian Federation.
Current Russian rouble banknotes and coins
Today, banknotes in denominations of 5, 10, 50, 100, 500, 1000 and 5000 Russian roubles are in circulation.
Regarding coins, denominations of 1, 5, 10 and 50 kopeks, and 1, 2, 5 and 10 roubles are in use. | ||||
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] | null | [
"calogero guagenti"
] | 2024-08-20T01:57:00 | Use our currency converter to find the live exchange rate between RUB and USD. Convert Russian Ruble to United States Dollar | en | Forbes Advisor | https://www.forbes.com/advisor/money-transfer/currency-converter/rub-usd/ | Select Region
United States
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1 RUB To USD
Convert Russian Ruble To United States Dollar
1 RUB = 0.011111 USD Aug 20, 2024 01:57 UTC
Check the currency rates against all the world currencies here. The currency converter below is easy to use and the currency rates are updated frequently. This is very much needed given the extreme volatility in global currencies lately.
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0.011111 United States Dollar
1 RUB = 0.011111 USD
1 USD = 90.000900009 RUB
RUB to USD Chart
Russian Ruble to United States Dollar
1 RUB = 0.011111 USD Aug 20, 2024 01:57 UTC
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9245 | dbpedia | 0 | 69 | https://www.statista.com/statistics/1200710/rub-usd-exchange-rate-russia/ | en | USD/RUB exchange rate 1992-1998 | [
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] | null | [] | null | The exchange rate of the U.S. | en | Statista | https://www.statista.com/statistics/1200710/rub-usd-exchange-rate-russia/ | U.S. dollar's exchange rate to the Russian ruble 1992-1998
Published by Statista Research Department,
Exchange rate of the U.S. dollar to the Russian ruble from July 1, 1992 to December 31, 1998
table column chart
CharacteristicExchange rate31.12.199820.6501.12.199817.8803.11.199815.8201.10.199815.9101.09.19989.3301.08.19986.2401.07.19986.202.06.19986.1701.05.19986.1301.04.19986.1103.03.19986.0703.02.19986.0301.01.19985.9602.12.19975,92101.11.19975,88701.10.19975,86102.09.19975,83201.08.19975,80001.07.19975,78203.06.19975,77401.05.19975,76401.04.19975,72901.03.19975,67901.02.19975,63201.01.19975,56003.12.19965,51301.11.19965,45601.10.19965,40203.09.19965,34501.08.19965,19702.07.19965,11901.06.19965,01801.05.19964,94003.04.19964,86301.03.19964,81802.02.19964,73605.01.19964,66101.12.19954,58001.11.19954,50404.10.19954,49001.09.19954,44702.08.19954,40505.07.19954,55302.06.19954,95805.05.19955,13005.04.19954,92001.03.19954,47301.02.19954,04806.01.19953,62302.12.19943,24902.11.19943,08505.10.19942,66802.09.19942,20403.08.19942,06001.07.19941,98901.06.19941,91606.05.19941,85401.04.19941,75302.03.19941,66802.02.19941,56007.01.19941,25901.12.19931,23103.11.19931,17901.10.19931,16901.09.1993992.504.08.199398702.07.19931,05925.06.19931,06602.06.19931,05007.05.199382902.04.199369203.03.199364903.02.199357206.01.199341702.12.199241704.11.199239602.10.199230902.09.1992210.505.08.1992161.401.07.1992125.26
Zoomable Statistic: Select the range in the chart you want to zoom in on.
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Source
Use Ask Statista Research Service
Release date
2021
More information
Region
Russia
Survey time period
July 1, 1992 to December 31, 1998
Supplementary notes
Figures were obtained at the beginning of each month.
Release date is the date of access.
Citation formats | |||||
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"Carl Schreck"
] | 2014-12-02T10:03:09+00:00 | Russians are facing potential monetary mayhem as the ruble plummets amid declining oil prices and Western sanctions. But currency crises are nothing new for the ruble. | en | /Content/responsive/RFE/img/webApp/favicon.svg | RadioFreeEurope/RadioLiberty | https://www.rferl.org/a/ruble-history-crashes-russia-economy/26720846.html | The Russian ruble’s sharp plunge this week, which saw it fall below 50 to the U.S. dollar, has revived the specter of the kind of currency crisis that Russians have suffered through repeatedly over the past 25 years.
The ruble on December 1 took its steepest dive in intraday trading since 1998, when the Russian government defaulted on domestic debt on August 17 of that year and effectively devalued the ruble fourfold.
Sergei Aleksashenko, a former deputy finance minister under President Boris Yeltsin, says elements of the ruble’s current struggles remind him of that dark chapter in the currency’s turbulent recent history.
"What's happening now, say in the last days or weeks, reminds me strongly of the 1998 crisis after August 17, when psychology was the driving factor, a lack of faith of citizens and the business community in the national currency and the desire to flee from the ruble in any direction," Aleksashenko said.
When this mindset "transforms into panic," he added, "it's very, very difficult for the central bank to stave off devaluation."
Monetary mayhem, however, is nothing new for Russia. Here's snapshot of currency turmoil and devaluation in Russia over the past quarter century.
Soviet Twilight
The Soviet Union's final years saw the government grappling with a flailing economy and introducing monetary measures that sparked panic in the populace.
WATCH: Anxieties Rise Over Falling Ruble
In January 1991, Soviet leader Mikhail Gorbachev issued a decree voiding all 50- and 100-ruble notes in a bid to crack down on black-market currency dealers. Soviet citizens were given just three days to trade in their old notes, prompting angry mobs to descend on banks unprepared to handle the scale of the operations.
Later that year, the government slashed the ruble's value under the "tourist rate" -- offered by state banks to foreigners and Soviet citizens traveling abroad -- from around 6 rubles to around 27 rubles to the dollar. The ruble continued to tumble for the rest of the year as the dollar increasingly became Russians' currency of choice. By early December 1991, the ruble was valued at nearly 100 to the dollar. Later in the month, the Soviet Union ceased to exist.
‘Shock Therapy’
The skyrocketing inflation under the Yeltsin government's free-market "shock therapy" reforms following the Soviet collapse saw millions of Russians lose their savings and the ruble weaken steadily over the course of several years.
In January 1994, the government banned domestic use of the U.S. dollar and other foreign currencies for purchases of goods and services in a bid to halt the ruble’s slide. In October of that year, the ruble plummeted 27 percent in a single day of trading that became known as "Black Tuesday" before the central bank stepped in to prop up the national currency. Before the Russian government lopped off three zeroes from the ruble in January 1998, a single U.S. dollar was worth around 6,000 rubles. Following the move, $1 was worth 6 rubles.
August 1998
After Russia defaulted on its debt and effectively devalued the ruble in August 1998, numerous Russian banks collapsed and ordinary citizens watched their savings vanish. In less than a month, the ruble plunged from 6 to 16 versus the dollar, eventually stabilizing at around 24 rubles to the dollar. Inflation for the year soared to 84 percent, while Russia’s GDP declined by 4.9 percent.
The 1998 crisis spawned a drastic decline in imports to Russia as the ruble weakened, though the devaluation strengthened demand for domestic production seen as crucial in the country's quick rebound from economic calamity.
Great Recession
After nearly a decade of strong economic growth on the back of lofty oil prices, both Russia's economy and the ruble were hit hard by the 2008 global economic crisis, in part due to falling energy prices. In early August of that year, the ruble was trading at a high of 23.4 to the dollar but shed 35 percent of its value against the dollar by January 2009.
The Russian government embarked on a policy of "controlled devaluation" to deal with the crisis, using foreign reserves to temper the ruble's decline. Russian President Vladimir Putin, serving as prime minister at the time, said the policy was aimed at giving Russians the opportunity to "decide what they should do with their savings."
'Foreign Policy Adventures'
Aleksashenko,the former deputy finance minister, says that the roots of the ruble's current struggles lie both in the falling global oil prices and Russia's actions in the Ukraine crisis, including the annexation of Crimea and ensuing Western sanctions.
Sergei Guriev, a respected Russian economist and a former member of Sberbank's supervisory board, concurs, adding that stagnant economic reforms and rampant corruption are exacerbating the situation.
"The ruble is the function of two variables: one is oil price, and the other one is capital outflow," Guriev told RFE/RL. "Oil prices are going down, and this is not something that is homegrown. But capital outflow, and lack of capital inflow is homegrown in the sense that it is a function of foreign policy adventures and sanctions, and also lack of reforms that undermine the belief of the investors in the future of Russian economic growth."
"If Russia had better policy and better foreign policy," Guriev added, "the ruble would be stronger."
With reporting by AP and Bloomberg | ||||
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] | null | [] | null | Heading to Russia? Find out what currency is used in Russia, tips and tricks for Russian currency exchange, and spending and saving money on your visit. | en | Wise | https://wise.com/gb/travel-money/russian-currency | The currency in Russia is the Russian ruble. Each ruble is divided into 100 kopek.
When you’re buying currency for Russia, look out for the currency code RUB. And once you’re in Russia, you’ll see the symbol ₽ used to show prices.
You’ll find Russian banknotes in denominations of 5, 10, 50, 100, 200, 500, 1000 and 5000 - although the 5, 10, 200 and 2000 RUB notes are seldom used.
Russian coins come in 1,2, 5 and 10 rubles and 1, 5, 10 and 40 kopek.
The Wise Russian ruble travel money card lets you top up in your local currency, and switch to ruble to spend when you’re in Russia. You’ll get the best rate for spending in Russian ruble - and can also hold and spend 40+ other currencies with the same card.
Get your Wise travel money card online for free, to send and spend money around the world at the mid-market exchange rate.
Simply top up your card and convert to the currency you need in real time using the Wise app.
You’ll always get the mid-market exchange rate with no hidden costs, and you’ll avoid foreign transaction fees while withdrawing from ATMs abroad, paying in restaurants and shops, and buying your accommodation and flights.
Learn more about the Russian ruble card
Paying by credit or debit card in Russia
In Russian cities and towns you'll find credit and debit cards are accepted by most merchants. However, having some cash is a must if you're headed into the countryside.
ATMs in Russia
There are ATMs on every corner in Russian towns and cities. Look out for signs that say bankomat (БАНКОМАТ) in shopping centres, banks and transport hubs.
To get the best deal when spending on card or withdrawing money in Russia, don’t forget to use the Wise travel money card to avoid sneaky exchange rate markups and excessive fees. | |||||
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] | null | [
"Oscar L. Altaian"
] | 1960-01-01T00:00:00 | THERE HAS BEEN an increasing amount of comment in the world press about the possibility that the U.S.S.R. may introduce a gold ruble, and widespread speculation about the effects of such an action. The anticipated effects upon the noncommunist world have, on the whole, been described in gloomy terms. They have included such fears as that the introduction of a convertible ruble may tend to weaken the U.S. dollar, open the way for speculative “bear” attacks on the dollar and major European currencies, upset world commodity markets and prices, and touch off widespread disturbances of trade. Fears of this kind have been summarized in the phrase that a convertible ruble would be a monetary sputnik. | en | /fileasset/fileasset/IMF_Seal_blue.png | IMF eLibrary | https://www.elibrary.imf.org/view/journals/024/1960/001/article-A004-en.xml | Production
Although there continue to be wide differences of opinion about the amount of gold currently produced in the U.S.S.R., as well as about the trend of output in the postwar period, a good deal is known about production prior to World War II. The U.S.S.R. was, of course, one of the world’s large producers before 1914, and its output in that year (at the present price of $35 per ounce) was $75 million. Production dropped rapidly during 1914–18 and the subsequent years of revolutionary fighting, falling to $3 million in 1921. By the end of the 1920’s, output had recovered to prewar levels, and it expanded rapidly during the 1930’s; it was $270 million in 1936 and $220 million in 1937.1 The Soviet authorities have published no information on gold production since that date. There is little doubt that, if the U.S.S.R. had continued to apply the necessary priorities, it could have expanded gold production further. A leading Soviet textbook on economic geography, written in 1939, stated that “the U.S.S.R. has the world’s largest reserves of gold … The U.S.S.R. is second only to the Union of South Africa in the mining of gold, having already surpassed Australia, Canada, and the United States.”2 Littlepage, whose engineering experience in gold mining in the Soviet Union in the 1930’s is second to none, is authority for the statement in 1938 that the U.S.S.R. could have made further substantial increases in gold production, possibly to the level of output in South Africa, by the end of that decade.3 (At the time Littlepage made this estimate, production in South Africa was at an annual rate of more than $400 million, reaching $504 million in 1941.) Such further expansion, however, was not attained. By 1939–40, output was perhaps 15–25 per cent lower than at its peak in 1936.4
No high degree of accuracy can be claimed for any of the widely varying estimates of current Soviet gold production, which range from $215 million to $630 million per year.5 However, even the lowest estimate places the U.S.S.R. among the major producers of gold. Samuel Montagu & Co. estimated 1958 production as more than 17 million ounces (about $600 million);6 and other writers estimate production in that year at 12–15 million ounces ($420–520 million).7 The U.S. Bureau of Mines estimated production in 1958 at about $350 million.8 Alec Nove stated that it is quite possible that actual gold sales by the U.S.S.R. in recent years have been “roughly equal to current production,”9 which would imply an annual output of perhaps $250 million or $300 million. Finally, according to a report in The Northern Miner,10 Soviet gold production is at the most 6 million ounces per year ($215 million).
Estimates of the trend of Soviet gold output in recent years have been similarly conflicting. According to the reports of the U.S. Bureau of Mines, annual production of $140 million in 1942–44 increased steadily to $330 million in 1951 and 1952; in the next three years, production was slightly lower, or about $315 million per year; in 1956–58, production was at the rate of $350 million per year.11 In contrast, a German study in 1959 estimated that production increased from $80 million in 1950 to $350 million in 1956 and 1957.12 An opposite trend is suggested in a 1957 news report that “there are indications that Soviet gold production may have dropped in recent years because of a cut in manpower,”13 and in a 1958 report, which said that gold output had been falling since 1953.14
In 1957, the Soviet authorities announced that the department concerned with gold mining was being reorganized; and the new head responsible for operations stated that by 1960 he hoped to achieve a sharp increase in output and a 25 per cent reduction in costs of production.15 In late 1959, it was stated that output in some gold fields would be 12 per cent higher than in 1956, and that the use of electric dredges under construction would reduce production costs.16
The growth of Soviet gold production is reported to be largely the result of the expansion of placer mining in Siberia. Although some gold is obtained from deep mining, there has been nothing to suggest that the Soviet Union has deep gold-bearing ores which can compare in either quality or quantity with those of South Africa. About 75 per cent of Soviet gold production is said to be concentrated in the sub-Arctic Far East area, where costs of transportation are high and working conditions severe.
Gold is also obtained as a by-product of mining nonferrous metals. Since the output of nonferrous metals is large and expanding, the production of by-product gold cannot help but be significant. In periods of prosperity, by-product gold is 35–40 per cent of total gold output in the United States and about 13 per cent in Canada. In the U.S.S.R., according to some estimates, it is 10–15 per cent.
The thesis has recently been advanced that Soviet gold mining costs are very high. One estimate puts the cost of production as equivalent to at least $166 per ounce at the official rate of exchange.17 There is, of course, no way of determining the accuracy of calculations, which are obviously guesses on a grand scale, of the costs expressed in rubles. Furthermore, the conversion of ruble costs into dollars at the official rate of exchange raises serious difficulties, and has on many occasions led to questionable, if not meaningless, results. Finally, direct cost calculations of this type, even when accurate, are not good guides to Soviet export-import policies. There is some dissatisfaction in the U.S.S.R. with the principles and procedures for determining costs, which differ from those in other countries. In any case, it is not the absolute cost of gold production that determines whether it is advantageous to produce gold for export, but rather the cost of producing gold relative to the cost of producing other commodities. If the cost of producing gold, equivalent to the ruble cost converted at the official exchange rate, is five times the world price, while that of timber is six times that price, it will be more economical for the U.S.S.R. to pay for imports with gold rather than with timber.
It is clear that the U.S.S.R. places substantial emphasis upon continuing and expanding the production of gold, which is used for export, stockpiling, and maintaining a gold connection for the ruble.
Sales
The U.S.S.R. has sold substantial amounts of gold in London, Zurich, and other financial centers in recent years. No official data have been released on the amount of these sales, but estimates have been made in the West from and by a number of different sources. Though these estimates are less speculative than those of gold production, they vary widely and have been subject to large retrospective corrections, both up and down. Estimates for 1957 indicate that gold sales were 712 million ounces, valued at $260 million; these were the largest in any postwar year up to that time. Sales in 1958 are estimated at $215 million, and those in 1959 were probably somewhat larger than sales in 1957.18
The U.S.S.R. sells gold to acquire foreign exchange with which to meet deficits in its balance of payments. To the maximum extent possible, gold is sold forward to obtain the price premium which has prevailed in recent years, but its forward sales are supplemented by spot sales when necessary.19 The U.S.S.R. apparently does not wish to create the impression that it exports gold fairly regularly, and its published plans neither suggest nor require the export of gold. Though, in time, it may again provide data on gold production or sales, its official attitude continues to be one of strict secrecy. The U.S.S.R. finds gold an admirable medium (leaving aside considerations of comparative costs) for meeting relatively small payments deficits. Sales of gold can be made without publicity, and they do not call attention to deficits in the Soviet balance of payments or to any particular events which may have caused them. This advantage of gold sales for the U.S.S.R. is mirrored by the fact that Western estimates of their magnitude vary so widely. Also, sales can be made quickly, without significantly affecting the market price of gold. They do not affect established commodity market relationships or trading channels. They provoke no political outcries on the part of the countries or producers whose products are affected. For example, public reaction to Soviet sales of aluminum and tin in 1957–58 was completely different from the reaction to sales of gold, even though the former were a much smaller percentage of world production than the latter. Sales of aluminum and tin were widely regarded as unfair competition or economic warfare.20 On the other hand, sales of gold totaling as much as $250 million per year—equal to about 25 per cent of the output of the rest of the world—tend to be accepted in rational, economic terms; indeed, they may even be considered helpful.
The U.S.S.R. has been an exporter of gold for many years, though the amount sold has varied greatly from year to year. The following estimate of Soviet gold exports in the 1930’s was made on the basis of admittedly incomplete data:21
Year Exports
(million
U.S. dollars) Year Exports
(million
U.S. dollars) 1931 100 1936 10 1932 80 1937 210 1933 70 1938 120* 1934 85 1939 55 1935 25 1940 55
Year Exports
(million
U.S. dollars) Year Exports
(million
U.S. dollars) 1931 100 1936 10 1932 80 1937 210 1933 70 1938 120* 1934 85 1939 55 1935 25 1940 55
According to these data, gold exports by the U.S.S.R. in the 1930’s totaled $800 million, or about 8 per cent of production in the rest of the world. Exports of gold were particularly heavy in 1937 and 1938, years marked by trials, purges, and disorganization of production. In these two years, exports were $330 million, equal to 15 per cent of production in the rest of the world, though if allowance is made for the gold which was obtained from Spain during the Civil War and apparently hoarded, the U.S.S.R. was a net importer.
In the 11 years 1946–56, the U.S.S.R. probably sold about $800 million of gold, equivalent to 9 per cent of gold production outside the Soviet bloc. Average sales in this period were about $75 million per year, and this low figure reflects the fact that sales were negligible in the early postwar years. In the three years 1957–59, gold sales totaled more than $700 million, equivalent to 20–25 per cent of gold production outside the Soviet bloc, and average annual sales were about $245 million.
These estimates may give a misleading impression of the present importance of gold exports in the Soviet balance of payments. Exports of gold were relatively much more important in paying for Soviet imports in the 1930’s than they have been in the postwar period. In 1957, when gold sales were $260 million, exports to countries outside the Soviet bloc were about $2 billion at the official rate of exchange, and total Soviet exports were $4.4 billion. In 1938, when gold sales were at least $120 million, exports to all countries were only $250 million; in 1937, the ratio of gold sales to exports was even larger.22
As a major exporter of gold, the U.S.S.R. naturally has an interest in the price of gold,23 though there have been no official expressions of opinion about the present price of $35 an ounce. Indeed, it may well be felt that any argument advanced by the U.S.S.R. might actually damage in some quarters the case for a higher price. Nevertheless, in 1958, the Deputy Premier of the U.S.S.R., Mikoyan, was reported to have urged an increase in the price of gold, arguing that the present price was an “artificially established” one, and that “the difference between this price and the one that should exist amounted to tribute paid by the countries that sell gold to the United States.”24
If the U.S.S.R. were actively interested in forcing the United States to increase the price of gold, it should withhold gold rather than sell it. If U.S.S.R. policy were motivated by the argument sometimes put forward that the inadequate supply and production of gold outside the communist bloc are retarding economic expansion, it would also follow the policy of selling as little gold as possible. In these circumstances, withholding gold would be economic warfare on a grand scale. Increased gold sales would, on the contrary, strengthen the financial system of the non-Soviet world and make it easier to maintain the price of gold at $35 an ounce.
Stocks
Estimates of the gold holdings of the U.S.S.R. vary greatly. A number of estimates are in the neighborhood of $8 billion; one or two estimates are considerably higher; while yet others set holdings at only a fraction of this amount.25 Their size has not been reported by the U.S.S.R. since the 1930’s.26 Estimates of current gold reserves are based on data for production and sales, and are naturally subject to wide errors. Nevertheless, the gold holdings of the U.S.S.R. must be substantial. These would include the gold received from Spain during the Spanish Civil War and the excess of production over sales for about 30 years. Stalin reportedly attached great importance to gold production and reserves.27 These reports are consistent with the large expansion of output in the 1930’s—at great cost in human lives and suffering—and with the fact that production of gold was continued and even expanded during World War II. There appears to be considerable attention to gold production under the Khrushchev regime.
On a number of recent occasions, the U.S.S.R. has linked the idea of expansion of trade with the rest of the world to the grant of substantial lines of credit. For example, this point is reported to have been raised by Macmillan and Khrushchev in their discussions in the spring of 1959 on increasing trade between Great Britain and the U.S.S.R., with the former reportedly saying that he would be glad to accept gold in payment for goods, and the latter replying that the U.S.S.R. did not have any gold. Khrushchev’s denial is, of course, to be interpreted figuratively. The U.S.S.R. has a substantial quantity of gold, even if it is probably much less than the large amounts often mentioned. Khrushchev’s denial certainly does not mean that the Soviet gold holdings are small. His views on the role of gold—and his reasons for shifting attention away from gold—were implied during a press interview in 1958:
Question: We understand, Mr. Khrushchev, that your policy consists in balancing export and import so as to get by without the purchase and sale of gold.
N. S. Khrushchev: You won’t get very far on gold reserves alone, there is always a limit to them, whereas the development of the economic potential and the production of commodities is the capability of the nation, the capability of the people, and all this is always richer than gold reserves. Economic relations between countries should be developed mainly on the basis of exchange of commodities, in other words, on the basis of purchase and sale. We do not deny that gold does play its part in trade and we are not advocates of sitting on sacks of gold.28
These views, which were not further elaborated, are, of course, not novel or surprising. The U.S.S.R. knows that part, if not all, of its gold production will have to be exported to pay for imports; it wishes to increase its exports of certain types of goods but it would like to increase its imports even more; and it would prefer to pay for some of these additional imports with credits, which would ease the strain of exporting. The U.S.S.R. may also be of the opinion that it might receive easier economic, and less suspicious political, treatment if it simultaneously increased its imports and became a debtor on a substantial scale.
These considerations do not, however, explain why the U.S.S.R. has gone to such pains to accumulate what must be considered, by any standard, as large gold reserves. The answer to this question is probably to be found from an examination of the three following considerations.
First, the U.S.S.R. has accumulated gold both to meet fluctuations in its balance of payments and to serve as a “war chest.” Such accumulation is not unusual for any country; indeed, given the inability of the U.S.S.R. to obtain credits on a significant scale, it has been indispensable. After the Revolution, the Soviets had periods when they had little to export except gold—and on several occasions they found it difficult to export that.29 Since those days, the U.S.S.R. has had balance of payments deficits, some of which were obviously unplanned, and it is clear that state planning is no guarantee against future deficits. Time and again the U.S.S.R. has encountered difficulties, and adverse political reactions, in trying to expand exports of one commodity or another to finance such deficits. Gold is practically the only exception to this experience. Lenin’s essay in 1921, The Importance of Gold Now and After the Complete Victory of Socialism, is often quoted to the effect that gold is useless—“when we conquer on a world scale I think we shall use gold for the purpose of building public lavatories in the streets of several of the large cities of the world. This would be the most ‘just’ and educational way of utilizing gold.” But if Lenin considered gold useless in the socialist future, he considered it necessary in the capitalist present. As he explained it:
However “just,” useful, or humane it would be to utilize gold for this purpose, we nevertheless say: Let us work for another decade or so with the same intensity and with the same success as we have been working in 1917–21, only on a wider field, in order to reach the stage when we can put gold to this use. Meanwhile, we must save the gold in the R.S.F.S.R., sell it at the highest price, buy goods with it at the lowest price. “When living among wolves, howl like the wolves.”30
Secondly, the U.S.S.R. has produced gold as a by-product of other things. The term by-product is used here not in a technical sense (i.e., a by-product of copper or other metals) but rather in a political and social sense. The Soviet system in the 1930’s produced hundreds of thousands of persons who had to be punished, removed from European Russia, and put to work at jobs that required only the simplest tools. Pick and shovel brigades in the remotest recesses of Siberia met these requirements; and when these brigades worked on the extremely rich placer deposits of Kolyma, they produced large amounts of gold. Later, prisoners of war and political prisoners from nations that were overrun provided additional labor on a large scale. As these sources of cheap labor dried up after the war, the labor force fell and mechanization and rationalization became indispensable if production was to be maintained and expanded. But before they became indispensable, some 20 years had been gained, billions of dollars of gold had been produced, and the settlement of remote areas had been facilitated.
It may be that “with the virtual end of forced labor, bearing in mind the remote Arctic location of Soviet gold mines, it seems uneconomic to mine gold for sale abroad at $35 an ounce. It would make better sense to sell other things, including tin and aluminum.”31 On the other hand, it may be argued that the high cost and the comparative disadvantage of gold production have not been proved conclusively; that the stable market for gold compensates in part for its comparatively low price; and that the price of gold may be increased.
Thirdly, the U.S.S.R. attaches great importance to gold for internal purposes. To quote from a recent Soviet textbook, Political Economy:32
Of course only a monetary commodity which itself has value can have the function of a measure of value—such as gold. In the Soviet Union and the other countries of the socialist camp gold plays the part of universal equivalent. Soviet currency has a gold content, being tokens of gold.
In socialist society money can only fulfill the functions of a measure of the value of commodities by virtue of its connection with gold … Soviet money retains the historically derived connection with gold.
This statement is, of course, almost identical with that of Marx: “Only insofar as paper-money represents gold, which like all other commodities has value, is it a symbol of value.”33
The attitude of the U.S.S.R. toward a gold-connected money, whatever this may mean in respect to the Soviet money supply, is firmly rooted in Marxian doctrine. It has been suggested (not without a certain wry humor) that the Soviet attitude toward gold is actually more Victorian than the attitude of the West.
The previous discussion has made it clear that any estimate of Soviet gold holdings is subject to very wide error. Nevertheless, an estimate of the probable range of these holdings may have some limited usefulness. Gold holdings were last reported as $840 million in 1935. In the period 1936–59, these holdings were increased by the gold obtained from Spain during the Civil War, amounting to more than $500 million, and by production, estimated at from somewhat less than $5 billion to somewhat more than $7 billion; and they were reduced by sales amounting to at least $2 billion. The combination of these estimates would suggest that Soviet gold holdings at the end of 1959 were in the range of $4.0–6.5 billion.
Ruble deposit balances
The establishment of a convertible ruble would imply a belief that foreigners were willing to hold deposit balances in rubles, in part because they were willing to conduct some of their international trade in rubles. The ruble would not be made convertible into gold if it were expected that rubles would in fact be converted, for this would be equivalent to selling gold. The expectation must be that as a general rule the rubles would not be converted.
Ruble balances could be created if the U.S.S.R. ran a balance of payments deficit and its creditors accepted payment in ruble deposits. The U.S.S.R. might secure genuine advantages if it could persuade foreigners to build up such deposit balances. It would obtain foreign goods by a process equivalent to borrowing at short term, with the prospect of paying little interest on the amount borrowed. It could thus increase its imports without increasing its exports, or, alternatively, reduce or eliminate its sales of gold while maintaining its exports unchanged.
Foreigners could perhaps be persuaded to hold ruble balances willingly for essentially the same reasons as they now hold dollar or sterling balances. They could build up working balances which would be drawn upon when receipts from exports did not exactly match payments required for imports, and use these balances either to pay for future imports or to buy other currencies. Conceivably, these balances could be set up under interest-earning arrangements. Nevertheless, for reasons discussed below, it is unlikely that in the near future these considerations would be effective in relation to ruble balances.
Certain countries already have one important immediate incentive to hold ruble balances arising from the balance of trade. The U.S.S.R. has a substantial volume of trade. It offers the ever present attraction that it may greatly increase this volume, and the ever present threat that it can sharply redirect it. Soviet trading is highly centralized on a state basis and hence is conceived largely in bilateral terms. The U.S.S.R. will not necessarily import from all the sources of supply with which it can do business at the same price, nor will it always export to all countries at the same price. A recent study showed substantial differences between the prices paid by or to other Soviet bloc countries and those paid by or to other European countries; furthermore, there are large differences among the countries in each group.36 The terms of trade in any particular situation may be made so favorable that a country may be induced to hold “swing balances” in rubles as part of the quid pro quo. On several occasions the U.S.S.R., in accordance with a bilateral arrangement, has paid more than the world price. In such transactions the U.S.S.R. usually exports after it imports, so that the partner country would hold a ruble deposit balance until the transaction had been completed. Balances may also arise when the U.S.S.R. agrees to export capital goods, which may have a long delivery term, and to accept in payment consumer goods which can be delivered immediately.37
Short-term capital movements in the form of gold, dollars, and other convertible currencies could create ruble balances. Deposits denominated in gold rubles could be attracted by competitive rates of interest and strong security against devaluation. If these deposits were set up with gold, the U.S.S.R. could sell the gold deposited with it, invest the proceeds in world money markets, cover its gold obligations with its substantial gold reserves and its future gold production, and make a profit into the bargain.38 On the other hand, if the U.S.S.R. were to spend the foreign currency equivalent of its ruble deposits rather than to invest in money market securities, it would in effect be the recipient of a short-term loan at a rate of interest that consisted of the rate it paid its depositors plus its own handling costs. The development of a short-term money market in Moscow would certainly depend upon simultaneous far-reaching changes in the trading relations between the U.S.S.R. and the rest of the world. At present, such changes seem to be quite out of the question. Nevertheless, although these operations may sound fantastic now, they are by no means impossible at some future time.
Convertibility of ruble into other currencies and goods
The currencies that play an important role in international finance are convertible not only into other currencies but also into goods. It is precisely for this reason that these currencies are readily accepted in other countries. For the U.S.S.R., however, goods convertibility would be much more difficult to achieve than currency convertibility.
The ruble would be externally convertible if it could be used without restriction to buy other currencies. It could be convertible at some predetermined rate, or within predetermined margins on either side of a parity rate. It could be convertible even if there were no parity, as the fluctuating rate of the Canadian dollar testifies. But if wide use is to be made of a currency which has no parity and an indeterminate spread, there must be some assurance that the rate will not be officially manipulated. Fluctuations determined by market forces are to some extent predictable—or at least, persons operate in such markets on the idea that they are predictable.
For many years the ruble has been formally equal to 0.222168 gram of fine gold, and there is little doubt that a convertible ruble would continue to have a stated parity in terms of a quantity of gold. Though circulation is restricted to the U.S.S.R., the ruble is, nevertheless, traded on a number of black markets at a very large discount from its official dollar parity and at a substantial discount from the rate extended to tourists.
It is unlikely that any substantial volume of capital funds would move to the U.S.S.R. unless there were some guarantee of the rate at which these funds might be repatriated. If the Soviet authorities were prepared to maintain a dollar-ruble rate at par, funds could flow into or out of ruble balances solely on the basis of interest differentials plus costs. On the other hand, if the exchange rate fluctuated between predetermined margins, the interest differentials required to attract and retain funds would be larger. This might imply the development of forward quotations for dollars in terms of rubles.
The U.S.S.R. could easily make the ruble externally convertible in view of its control over the balance of payments and internal prices. The floating supply of rubles in the hands of foreigners could be controlled by bilateral trading deals, and the ruble could be made formally convertible because, in fact, no one would have rubles to convert.
As stated above, the establishment of goods convertibility for the ruble is much more problematical.39 Here the question is what goods a foreigner may buy with rubles, and what prices, terms, and conditions may be applicable to such purchases.
In free economies—such as the United States and the countries of Western Europe—an effort is made to give purchasers the maximum freedom of choice and to facilitate a high degree of competition to make this freedom effective. When there is already a high standard of living, and a fairly flexible economy, there are large reservoirs of capacity and investment to meet any new demands within a reasonable period of time. Subject to some limitations applicable to goods having strategic or defense importance, citizens and residents with domestic money can use this money to buy anything they wish. Even more important in this connection, all the interested foreigners also can buy the same goods and at the same prices. When there are limitations, most of them apply to citizens and foreigners alike.
The conditions in the U.S.S.R. are very different. The U.S.S.R. economy has expanded rapidly in the face of considerable shortages, and it is always pushing hard against capacity in one important field or another. Over very long periods, it has employed rationing, differential pricing, “expediting,” and the principle of first come, first served to allocate short supplies. There are many commodities which a Russian holding rubles cannot buy at any price. There are even more which a foreigner cannot buy at all, let alone buy at a reasonable price or within a reasonable delivery period. Given the number of tight spots and bottlenecks in the Soviet economy, there are many commodities which cannot be exported in any substantial volume without threatening the disruption of centralized production plans. Failure on the part of a Soviet citizen to produce an assigned quantum of goods may be severely punished (and has not infrequently been considered sabotage), and any proposal to permit free foreign purchases of scarce goods would be much the same as a request to authorize economic warfare.
There is thus a very great difference between what Soviet goods a foreign holder of rubles can buy and what, for example, U.S. goods a foreign holder of dollars can buy. A holder of rubles can buy only what the Soviet Government wishes to sell; a holder of dollars can buy anything at the prevailing price. Since it is anticipated that Soviet bilateral deals will balance, a country left with a ruble credit at the end of a deal may be in a worse position for the next deal than if it had come out even.40 The reason is that, with respect to any trading negotiations, the U.S.S.R. prefers to have payment for its exports in imports rather than in balances of its own currency.
There are three principal reasons why the ruble is unlikely to be made freely convertible into goods in the near future. First, many goods are not generally available either for domestic purchase or for export. Second, Soviet prices reflect not only differential commodity tax burdens, but also a structure of costs that differs widely from that of other major countries. As a result, there is great dissimilarity between the structure of Soviet prices and that of world prices. Specifically, consumer goods are much more expensive relative to capital goods in the U.S.S.R. than in Europe and the United States. The relationship of the price of one good to the price of another may function more or less satisfactorily for internal pricing41 without indicating the relationship at which the U.S.S.R. will trade one or the other to foreigners. Relative prices reflect all the singularities of Soviet policy with respect to social and political objectives, costing, and pricing.42 Third, external prices are affected by an additional distorting element, the overvaluation of the ruble.43 The present exchange rate of four rubles to the dollar is not realistic, but this fact is not important to the U.S.S.R. The exchange rate does not have to convert domestic ruble prices into realistic world prices, since it is not designed to move exports or to equilibrate foreign receipts and payments in terms of a price mechanism. If the U.S.S.R. wishes to export goods, it is not bothered by calculations of the domestic price converted at parity—it simply sells on the basis of the world price. The extent to which it shades the world price depends upon the stability of that price and how anxious the U.S.S.R. is to sell quickly.
When the U.S.S.R. wishes to sell, the world price is controlling. When the U.S.S.R. does not wish to sell, a foreign buyer would not be able to buy at any price or, to the same effect, he might be quoted an impossible export price based on the domestic price converted at the official rate of exchange.
A speech by K. V. Ostrovityanov to the 21st Congress44 described parts of the above situation in the following words:
The growth of international socialist division of labor and economic connections between socialist countries inevitably will call forth growth and development of monetary exchange. On the other hand, monetary-exchange relations will develop into interrelations between countries belonging to the two different systems—socialism and capitalism… .
The development of monetary-exchange relations in the economic interrelations between countries of the socialist camp will call for, of necessity, a single standard for the comparison of costs of production in a given country with costs in other countries of the world system of socialism and also for comparison of competitive totals of the two systems—socialism and capitalism… .
At the present time the countries of the socialist camp are concluding trade agreements between one another based on world prices which have been corrected suitably45 in order to give them great stability… .
The goods convertibility of the ruble is and will continue to be severely limited. This is clearly the situation between the U.S.S.R. and the countries outside the Soviet bloc. It is also, but less clearly, the situation within the bloc, where trade is essentially on a barter basis. The bloc countries several years ago instituted a so-called system of multilateral clearings to obtain some of the advantages of convertibility. This system was expanded in late 1959 to provide interconvertibility of bloc currencies, though the terms and conditions of this inter-convertibility were not announced.46 The effectiveness of any such agreements would continue to depend upon whether, with the funds obtained through conversion, a member of the bloc could obtain from another member, on fair terms, the goods it wanted. It is unlikely that any agreements on convertibility could assure this. The bloc might set up arrangements that formally looked like the European Payments Union, or some system of convertibility on a regional basis, which, however, functioned quite differently. Monetary refinements by themselves do not eliminate the barter character of U.S.S.R. trade that the combination of state trading, shortages of goods, and distortions of internal prices and exchange rates makes inevitable. Nor does the introduction of a third country into a two-sided barter transaction eliminate the barter element. Thus, when Burma earned a ruble balance with the U.S.S.R. by selling rice, and wanted to buy goods in Czechoslovakia with this balance, it engaged in three-cornered negotiations to bring the deal off. The same sort of problem would arise if, for example, Poland wished to spend ruble balances in Czechoslovakia.
In short, the U.S.S.R. could easily make the ruble technically convertible into other currencies within the Soviet bloc, or in a considerably wider area. The strict controls that are exercised over imports, exports, and the balance of payments guarantee, however, that such convertibility would impose no significant changes on the U.S.S.R. On the other hand, it would have no real economic advantages, though the establishment of convertibility in this sense might be good propaganda.
If the U.S.S.R. became a center for short-term capital movements by accepting ruble deposits denominated in gold, and if it paid interest on these deposits, it could enter the banking business in competition with other centers, scoring certain economic and propaganda advantages. But any possibility that the U.S.S.R. can, in any meaningful sense, make the ruble convertible into goods, either at the present time or for years to come, is very remote. This deficiency would severely limit any use that other countries might make of the ruble, even if it were made technically convertible. It has been recognized in the U.S.S.R. itself that the ruble can become an international currency only when it is responsible for a much larger share of the world’s production and international trade, and when prices in the communist countries are made more competitive than they now are with those in capitalist countries.47 The realization of these objectives requires not only the adjustment or rationalization of relative prices in the U.S.S.R. but also the adoption of a realistic exchange rate. | ||||
9245 | dbpedia | 3 | 9 | https://www.economicsobservatory.com/russias-1998-currency-crisis-what-lessons-for-today | en | Russia's 1998 currency crisis: what lessons for today? | [
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"Christopher Coyle"
] | 2022-05-16T00:00:00+00:00 | In 1998, Russia experienced sovereign debt default, a massive devaluation of the rouble and a banking crisis. Triggered by the invasion of Ukraine, the currency’s value has again tumbled – and this crisis may be longer lasting and more severe without a move towards peace. | en | Economics Observatory | https://www.economicsobservatory.com/russias-1998-currency-crisis-what-lessons-for-today | Following Russia’s invasion of Ukraine in February 2022, the value of the Russian rouble relative to the US dollar fell by over 40% in just two weeks. A depreciation of such scale would be extraordinary for most countries, but this is not the first significant currency devaluation that Russia has faced in its recent history.
In 1998, Russia experienced a major currency crisis when the rouble lost over two-thirds of its value in three weeks, as well as a default on its sovereign debt and a banking crisis. Are there any lessons from that crisis that are relevant today?
Figure 1: USD/RUB exchange rate, January 1995-April 2022
Source: Bloomberg
Background and causes of the 1998 rouble crisis
The fall of the Soviet Union in 1991 preceded several years of economic reform, privatisation and macroeconomic stabilisation policies in Russia. A central element of this was the adoption of a currency peg – a type of exchange rate regime in which a currency's value is fixed against the value of another currency.
This meant that the value of the rouble relative to the dollar was constant and only allowed to fluctuate within a narrow band. The Bank of Russia would intervene by buying and selling the rouble as necessary to maintain the exchange rate.
The Russian economy was also supported by financial aid from the World Bank and the International Monetary Fund (IMF), while negotiations to repay foreign debt inherited from the Soviet Union improved investor confidence (Chiodo and Owyang, 2002).
In the first quarter of 1997, foreign investment in Russia rose sharply with the relaxation of restrictions on foreign portfolio investment. But investor expectations soon changed following the Asian financial crisis, which began with the collapse of the Thai baht in July 1997. This crisis quickly spread to other Asian currencies and by November, the rouble also came under attack by speculators (Chiodo and Owyang, 2002).
Despite the reforms introduced since 1991, fundamental institutional weaknesses remained in Russia (Sutela, 1999; Chiodo and Owyang, 2002). These weaknesses were highlighted and exacerbated by the financial crisis in Asia.
A global recession and a fall in commodity prices compounded weak tax enforcement in Russia and an expensive war in Chechnya. This led to fiscal imbalances and raised questions about the government’s ability to pay its sovereign debts and maintain a fixed exchange rate (Desai, 2000; Kharas et al, 2010). This increase in default and exchange rate risk made capital flight from Russia and a devaluation of the rouble more likely.
In an attempt to encourage investors to hold rouble-denominated assets and support the fixed exchange rate, the Bank of Russia increased interest rates to 150%.But this meant that by July 1998, interest payments on Russia’s debt were 40% higher than the country’s tax collection. This had the effect of further eroding investor confidence and creating downward pressure on the currency.
In early August 1998, driven by fears of a default on domestic debt and a rouble devaluation, the Russian stock, bond and currency markets all came under severe pressure. Trading on the stock market was suspended for 35 minutes due to sharp falls in prices.
Then on 17 August, the government announced a devaluation of the rouble’s pegged exchange rate, a default on its domestic debt and a 90-day suspension on payments by commercial banks to foreign creditors.
Two weeks later, on 2 September, the Bank of Russia abandoned its efforts to maintain a fixed exchange rate and allowed the rouble to float freely. In three weeks, the currency had lost about two-thirds of its value (Kharas et al, 2010).
Consequences and recovery
There were significant domestic and international consequences of these events. The currency crisis and associated financial market turmoil contributed to a recession and contraction of the Russian economy by 5.3% in 1998, with GDP per capita reaching its lowest level since the formation of the Russian Federation in 1991.
Inflation in 1998 was 84% because of rouble depreciation, contributing to a dramatic fall in real wages and social unrest. Workers staged strikes and large scale protests, including demonstrations in front of the Russian White House.
Increased political instability followed: both the prime minister and central bank governor were replaced; the new prime minister’s first budget was rejected; and the president’s popularity collapsed (Desai, 2000). In August 1999, within a year of the crisis, Vladimir Putin became the fifth prime minister in 12 months.
The crisis also had a significant effect on financial markets globally. Russia’s sovereign default was the largest in history at the time and contributed to the collapse of the LTCM (Long Term Capital Management) hedge fund in the United States, which required a $3.6 billion bailout. This led to substantial spillover effects in international markets (Dungey et al, 2002).
The Russian economy recovered relatively quickly from the 1998 crisis, growing by 6.4% in 1999 and 10% in 2000. The sharp depreciation of the rouble made Russian exports attractive internationally and, combined with an increase in oil income, helped to stimulate the economic recovery. Sovereign debt restructuring and an IMF loan of $4.8 billion helped Russia to regain access to international financial markets.
Lessons for today
It is important to note that the forces driving the 1998 crisis and today’s crisis are very different, both politically and economically. Yet there may be fundamental lessons about how crises evolve and their implications.
First, currency crises can be triggered by events that increase a country’s risk, reduce investor confidence and change expectations of a country’s economic outlook, causing capital flight.
As in 1998, the devaluation of the rouble in 2022 was fundamentally triggered by a large increase in Russia-related risk, although the source of this was very different in each case.
Second, currency crises often go hand-in-hand with other financial crises, such as sovereign debt defaults, stock market crashes and banking crises, and can lead to higher inflation and interest rates. These have important implications and in 1998, they culminated in a sharp increase in the cost of living, recession, social unrest and political instability in Russia.
The full extent of financial market difficulties in Russia today has, so far, been moderated by extensive government restrictions. Nevertheless, interest rates have already increased from 9.5% to 20%, before being reduced to 14%, and inflation had accelerated to 16.7% by March.
Further economic difficulties may still unfold in Russia, particularly as there is currently no sign of political risk abating as the war continues and sanctions increase. But a default on Russian foreign debt seems increasingly likely and a deep recession appears certain.
As in 1998, this may have implications for social and political stability. It has been shown that approval ratings of political leaders in Russia have tracked citizens’ perceptions of the state of the economy since 1991 (Treisman, 2011).
The 1998 crisis illustrates that economic shocks can reverberate throughout global financial markets. Today, many countries are experiencing rising inflation and weaker growth as a direct result of the war in Ukraine, with rising interest rates likely to follow. Numerous international companies have written down investments in Russia.
In contrast to 1998, Russia has adopted a floating exchange rate in recent years, which means that capital flight from the country should immediately be reflected in the exchange rate. Despite this and in contrast to 1998, the rouble exchange rate has recovered rapidly from its initial fall in early March 2022.
Rather than a reflection of reduced risk or increased investor confidence in the Russian economy, this recovery highlights Russia’s success at supporting the rouble with government interventions. These include trading restrictions, capital controls, increased interest rates and government requirements for business to hold 80% of overseas revenue in roubles.
This means that the rouble is no longer freely convertible and its value now tells us little about the reality of the Russian economy.
Notably, Russia was able to recover quickly from the 1998 crisis thanks to the stimulatory effect of the weaker rouble, increased oil revenue and help from the West in the shape of IMF loans. The rapid recovery of the rouble exchange rate in March 2022 combined with increasing international sanctions means that the expansionary forces that enabled a quick recovery from the 1998 crisis seem extremely unlikely today.
These lessons suggest that the full economic effects of recent events in Russia are yet to unfold, and without a move towards peace and geopolitical normalisation, the impact will be longer and more severe than in 1998.
Where can I find out more?
Currency crises in emerging markets: Council on Foreign Relations explainer on currency crises.
Has financial collapse saved Russia?: Anders Åslund on Russia’s 1998 crisis and recovery.
The price of war: Macroeconomic effects of the 2022 sanctions on Russia: Anna Pestova, Mikhail Mamonov and Steven Ongena on the economic effects on the Russian economy.
Economic spillovers from the war in Ukraine: The proximity penalty: Jonathan Federle, André Meier, Gernot Müller and Victor Sehn on stock market reactions to the invasion of Ukraine.
Russian consumers are already feeling the cost of war: The Economist compares current Russian inflation with the 1998 crisis.
The economic consequences of the war in Ukraine: The Economist on the geopolitical risk and economic consequences.
Who are experts on this question?
Paul Krugman
Maurice Obstfeld
Sergei Guriev
Daniel Triesman
Anders Åslund
Author: Christopher Coyle
Photo by ArtemSam from iStock | |||||
9245 | dbpedia | 0 | 2 | https://www.wikidata.org/wiki/Q615640 | en | Soviet ruble | [
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] | null | [] | null | currency of the Union of Soviet Socialist Republics; briefly used by post-Soviet states after the dissolution of the Soviet Union | en | /static/apple-touch/wikidata.png | https://www.wikidata.org/wiki/Q615640 | currency of the Union of Soviet Socialist Republics; briefly used by post-Soviet states after the dissolution of the Soviet Union | |||||
9245 | dbpedia | 2 | 88 | https://www.geeksforgeeks.org/countries-using-russian-ruble-know-everything-about-russian-ruble/ | en | Know Everything About Russian Ruble | [
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"GeeksforGeeks"
] | 2023-09-22T04:04:56 | A Computer Science portal for geeks. It contains well written, well thought and well explained computer science and programming articles, quizzes and practice/competitive programming/company interview Questions. | en | GeeksforGeeks | https://www.geeksforgeeks.org/countries-using-russian-ruble-know-everything-about-russian-ruble/ | In this article, we are going to see the countries that use Russian Ruble, along with some other important information. The Russian Ruble, also spelled rouble, is the currency of Russia, the former Soviet Union, and Belarus.
The notes on the Russian ruble are printed in Moscow’s state factory and the Russian coins are stamped in both countries Moscow and the st. Petersburg. Its currency is one of the strong currencies in the world, and Russia is one of the largest oil exporters in the world because of its powerful currency.
Russian Ruble Symbol:
The Ruble sign “₽” is a currency sign used to represent the Ruble in Russia. It is a “P” with a horizontal stroke.
Russian Ruble – Exchange Rate:
US Dollar
1.00 Russian Rubel = 0.015 US Dollar
Indian Rupee
1.00 Russian Ruble = 1.33 Indian Rupee
The Russian Ruble is 105% more expensive than Indian Rupee.
Euro
1.00 Russian Ruble = 0.016 Euro
Nigerian Naira
1.00 Russian Ruble = 6.91 Nigerian Naira
Bangladeshi Taka
1.00 Russian Ruble = 1.57 Taka
Pound
1.00 Russian Ruble = 0.014 Pound Sterling
Peso
1.00 Russian Ruble = 0.93 Phillippine peso
Russian Ruble: History
The Russian Ruble is the authorized currency of the Russian Federation and was introduced in the 13th century. The first biggest currency in the world is the pound sterling on the other hand the ruble is the second oldest currency in the world, which has been used since the 14th century. In 1992, the Belarusian ruble currency substituted the Russian ruble as the country’s authorized currency. The ruble was reintroduced as the Belarusian currency after signing an agreement in 1994. The ruble is one of the most effective currencies in the world, and it is also the currency of Belarus.
How Did the Ruble Get its Name?
Ruble’s name comes from the word Rubit. Rubit is a small piece cut from Grivna which is the too costly metal of that time. The layout of the Russian currency changed in 1991.
What Was the Old Russian Currency?
The oldest currency used in Russia was the Soviet ruble. The Soviet ruble was first introduced in 1922 as the currency of the Union of Soviet Socialist Republics, popularly called the USSR. At that time banknotes in sects of 5, 10, 50, 100, 500, 1000, and 5000 Russian rubles were in circulation in 1897, a gold ruble was substituted for the silver one. After World War First, gold coins disappeared from spreading countries and notes became inconvertible. During the term of the Russian revolt, inflation of astronomical proportions pushed the ruble value valueless. During the post world war second reform of 1947, the chervonets were deserted as the financial measure and the ruble was repaired.
How Old is the Russian Ruble?
The rouble was the currency of Russia for 500 years and it is subdivided into 100 kopeks.
In the current year 2022, the three variants of rubles:
The Russian ruble (RUB, ₽) in Russia, Abkhazia, and South Ossetia,
The Belarusian ruble (BYN, Br) in Belarus
TheTransnistrian ruble in Transnistria.
Summary:
The Ruble is the official currency of Russia and the most powerful currency in the world. The ruble also circulates in the Belarus market. Russia officially declared its currency ruble in 1991 and after that Russian trade proceeded with the currency ruble. Russia is one of the most powerful countries in the world and the area of Russia is also an enormous area. Russia is the motherland of literature and has 12 active volcanos. | |||||
9245 | dbpedia | 1 | 32 | https://www.cbr.ru/eng/cash_circulation/ | en | Cash Circulation | [
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] | null | [] | null | null | Cash — banknotes and coins — has the functions of currency and means of payment.
Pursuant to Article 75 of the Constitution of the Russian Federation, the Russian currency unit is the ruble. The Bank of Russia is the sole issuer of currency. The introduction and issue of another currency are prohibited in the Russian Federation.
Despite the rapid growth of cashless payments, cash money, i.e., banknotes and coins, remains an important part of the financial system and an important part of national identity and culture.
The Bank of Russia issues commemorative coins dedicated to significant dates, to Russian scientists, artists and cultural figures, to Russian regions, and to many other subjects. | ||||||||
9245 | dbpedia | 0 | 44 | https://www.toppr.com/ask/question/the-currency-of-russia-is-called/ | en | The currency of Russia is called.PoundLiraYenRuble | [] | [] | [] | [
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] | null | [
"Toppr"
] | 2020-01-09T00:00:00 | Click here:point_up_2:to get an answer to your question :writing_hand:the currency of russia is called | en | /ask/images/favicon.ico | Toppr Ask | null | The ruble was the currency of the Russian Empire and of the Soviet Union However, today only Russia, Belarus and Transnistria use currencie with the same name. The ruble was the first currency in Europe to be decimalised, in 1704, when the ruble became equal to 100 kopeks. In 1992 the Soviet ruble was replaced with the Russian ruble at the rate 1 SUR = 1 RUR. In 1998 preceding the financial crisis, the Russian ruble was redenominated with the new code "RUB" and was exchanged at the rate of 1,000 RUR = 1 RUB. | ||||
9245 | dbpedia | 3 | 11 | https://www.npr.org/sections/money/2022/04/05/1090920442/how-russia-rescued-the-ruble | en | How Russia rescued the ruble | [
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"Paddy Hirsch"
] | 2022-04-05T00:00:00 | The Russian ruble lost nearly half its value when Russia invaded Ukraine. Since then, it has been the top-performing currency in the world. | en | NPR | https://www.npr.org/sections/money/2022/04/05/1090920442/how-russia-rescued-the-ruble | Russia said last week that it wants the European countries that buy its natural gas to make their payments in rubles, rather than dollars or euros. A month ago, that might have seemed like a pretty good deal: The ruble was down 40%, at 139 rubles to the dollar, in the wake of Russia's invasion of Ukraine.
Since that low point on March 7, however, the Russian ruble has staged a dramatic recovery. At the time of this writing, it was trading at 84 to the dollar, which is right back where it was at the time of the invasion. And this is no dead cat bounce. It's a sharp and sustained recovery that made the ruble the world's top-performing currency in March.
Yet all the sanctions imposed when the war began are still in place, and in some cases they're even more robust. So how have the Russians managed to revive their currency?
The holes in the sanctions wall
This recovery has several components. The first is thanks to the enormous hole in the sanctions that were imposed by the coalition of countries allied with the U.S.: natural gas. The sanctions are designed to restrict Russia's ability to acquire foreign currency — dollars and euros in particular. But several European countries continue to buy Russian gas because they have become so dependent on it and because there are not enough alternative suppliers to meet demand.
Add to that the increase in oil and natural gas prices, as well as the resilience of Russia's trading relations with other big economies such as China and India, and the net result is that there is still a steady flow of foreign currency into Russia. This has eased concerns that Russia would become insolvent, and it has helped put a floor under the ruble.
Another hole in the sanctions is worth mentioning here: the sovereign debt carve-out. One of the biggest and most impactful sanctions on Russia was the freezing of its foreign accounts. Russia holds about $640 billion worth of euros, dollars, yen and other foreign currencies in banks around the world. About half that amount is located in the U.S. and Europe. The sanctions blocked Russia's access to that money, except when it comes to making the interest payments on its sovereign debt. The U.S. Treasury left a window open to allow financial intermediaries to process payments for Russia. That window is scheduled to close this month, but it has been a big help to Russia. Without it, Russia might have needed to raise dollars by selling rubles, which would have put downward pressure on the currency. And had it not been able to raise those dollars, it would have defaulted.
Financial alchemy
Those are the tangible external factors driving the ruble's recovery. The internal factors are somewhat less corporeal. On Feb. 28, the Central Bank of Russia increased interest rates to 20%. Any Russian who might have been tempted to sell their rubles and buy dollars or euros now has a big incentive to save that money instead. The fewer rubles that go up for sale, the less downward pressure there is on the currency.
Next comes a government requirement on Russian businesses that 80% of any money that those businesses make overseas has to be swapped into rubles. This means that a Russian steelmaker that makes 100 million euros selling steel to a company in France has to turn around and change 80 million of those euros into rubles, regardless of the exchange rate. A lot of Russian companies are doing a lot of business with foreign companies, making a lot of euros, dollars and yen. The order to convert 80% of those revenues into rubles creates significant demand for the Russian currency, thus helping to prop it up.
The Kremlin also issued an edict banning Russian brokers from selling securities owned by foreigners. Many foreign investors own Russian corporate shares and government bonds, and they might understandably want to sell those securities. By banning those sales, the government is shoring up both the stock and bond markets and keeping money inside the country, all of which helps keep the ruble from falling.
Russian citizens themselves have been targeted by the government, which has restricted them from transferring money abroad. The initial ban said all foreign exchange loans and transfers were to be suspended. This served to keep foreign currency in the country and discourage Russians from selling rubles for dollars or euros, which would put pressure on the currency. Those restrictions have been eased somewhat recently to give breathing room to Russians who regularly send money abroad, but conversions of hard currency are limited to just $10,000 for individuals through the end of this year.
Perhaps the biggest factor juicing the ruble is a risky ploy by President Vladimir Putin that we mentioned at the top of this story: telling certain buyers of Russian natural gas that they must henceforth pay their gas bills in rubles. Natural gas contracts are usually written requiring payment in euros or dollars, and the countries that buy natural gas — EU nations, the U.S., Canada, Australia, New Zealand, Japan and South Korea — tend not to have big reserves of rubles on hand. So if Putin is successful in forcing these countries to pay in rubles, they're going to have to go out and buy them. A lot of them. Demand for the currency will surge, and the price of the ruble will naturally rise. It's the anticipation of that rise that has helped drive the ruble's market value higher.
A Potemkin currency
You could say that these moves by the Russian government are just business as usual. After all, the Federal Reserve tweaks interest rates all the time. The U.S. Treasury has restrictions on remittances to certain countries. And why shouldn't a country be able to stipulate what currency it gets paid in? And don't governments have a responsibility to defend their currencies anyway? All fair points. What the Russian government is up to here, though, is more than defense of a currency: It is manipulating the market for rubles and manufacturing demand that would not otherwise exist.
Some observers are saying that Russia has essentially created a Potemkin currency. This is a reference to Grigory Potemkin, who was appointed governor of Crimea after Catherine the Great annexed it in 1784. Eager to show Catherine how successful he had been in resettling Crimea with Russian villagers, Potemkin supposedly built and populated a mobile village that he assembled, disassembled and then reassembled along her route as she inspected the region. The head of the Central Bank of Russia, Elvira Nabiullina, is essentially playing Potemkin to Putin's Catherine, using a range of tools to make the ruble look like a currency that has value when in fact very few people outside Russia want to buy a single ruble unless they absolutely have to and when many people inside Russia don't really want rubles either.
There are big risks to all this government intervention. The protectionist measures enacted by the Central Bank of Russia are effectively a kind of bridge for the ruble. If Russia manages to come to some kind of resolution over Ukraine that involves the withdrawal of sanctions and the reestablishment of trade relations with the West, then the ruble might hold its current value once the measures are withdrawn. If the measures are withdrawn without some kind of resolution, however, the ruble could collapse, hammering the economy, jacking up inflation and causing enormous pain to the Russian people. And the measures — some of them, at least — will have to be withdrawn eventually. Russian borrowers can't keep paying interest rates of more than 20% for long, if they can even conceive of borrowing at that rate. Growth will be stifled — the Russian economy is already expected to contract by more than 8% this year — and industry will slump.
Perhaps the greatest risks are those associated with Putin's natural gas ploy. As mentioned earlier, the natural gas contracts that buyers have signed with Russia all say that payment will be made in euros, dollars or other foreign currencies. Putin can't just cross out "dollars" or "euros" and write in "rubles" where those contracts stipulate how to pay. He has to renegotiate the terms of those contracts. And if he does so, it's likely that those countries will drastically reduce the amount of natural gas they buy from Russia. | |||||
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] | 2005-04-01T04:06:19+00:00 | en | /static/apple-touch/wikipedia.png | https://en.wikipedia.org/wiki/Soviet_ruble | Currency of the Soviet Union
RublePубль (Russian)
14 other official names
карбованець (Ukrainian)
сўм (Uzbek)
сом (Kazakh)
рубель (Belarusian)
манат (Azerbaijani)
მანეთი (Georgian)
сӯм (Tajik)
рублэ (Romanian)
сом (Kyrgyz)
rublis (Lithuanian)
манат (Turkmen)
ռուբլի (Armenian)
rublis (Latvian)
rubla (Estonian)
ISO 4217CodeSURUnitPluralrubli (nom. pl.), rubley (gen. pl.)Symbolруб or р (in Cyrillic)
Rbl/Rbls[1][2] or R[3] (in Latin)DenominationsSubunit 1⁄100kopeck (копейка)Plural kopeck (копейка)kopeyki (nom. pl.), kopeyek (gen. pl.)Symbol kopeck (копейка)коп. or к. in Cyrillic
kop., cop. or k (in Latin)BanknotesRbl 1, Rbls 3, Rbls 5, Rbls 10, Rbls 25, Rbls 50, Rbls 100, Rbls 200, Rbls 500, Rbls 1,000Coins1 kop, 2 kop, 3 kop, 5 kop, 10 kop, 15 kop, 20 kop, 50 kop, Rbl 1, Rbls 3, Rbls 5, Rbls 10DemographicsDate of introduction1922ReplacedImperial Russian rubleDate of withdrawal1992–1994Replaced bysee belowUser(s)
1922–1991:
Soviet Union
until 1994:[4]
Tajikistan
IssuanceCentral bankState Bank of the Soviet UnionPrinterGoznakMintLeningrad (1921–1941; 1946–1991)
Krasnokamsk (1941–46)
Moscow (1982–1991)This infobox shows the latest status before this currency was rendered obsolete.
The ruble or rouble ( ; Russian: рубль, romanized: rubl', IPA: [rublʲ]) was the currency of the Soviet Union. It was introduced in 1922 and replaced the Imperial Russian ruble. One ruble was divided into 100 kopecks (копейка, pl. копейки – kopeyka, kopeyki). Soviet banknotes and coins were produced by the Federal State Unitary Enterprise (or Goznak) in Moscow and Leningrad.
In addition to regular cash rubles, other types of rubles were also issued, such as several forms of convertible ruble, transferable ruble, clearing ruble, Vneshtorgbank cheque, etc.; also, several forms of virtual rubles (called "cashless ruble", безналичный рубль) were used for inter-enterprise accounting and international settlement in the Comecon zone.[5]
In 1991, after the dissolution of the Soviet Union, the Soviet ruble continued to be used in the post-Soviet states, forming a "ruble zone", until it was replaced with the Russian ruble in September 1993.
Etymology
[edit]
Main article: Ruble
The word ruble is derived from the Slavic verb рубить, rubit', i.e., 'to chop'. Historically, a "ruble" was a piece of a certain weight chopped off a silver ingot (grivna), hence the name.
The word kopeck or copeck (in Russian: копейка kopeyka) is a diminutive form of the Russian kop'yo (копьё)—a spear. The reason for this is that a horseman armed with a spear was stamped on one of the faces of the coin. The first kopeck coins, minted at Novgorod and Pskov from about 1534 onwards, show a horseman with a spear. From the 1540s onwards the horseman bears a crown, and doubtless the intention was to represent Ivan the Terrible, who was Grand Prince of all Russia until 1547, and Tsar thereafter. Subsequent mintings of the coin, starting in the 18th century, bear instead Saint George striking down a serpent.
Ruble in the Soviet Union
[edit]
The Soviet currency had its own name in all the languages of the Soviet Union, often different from its Russian designation. All banknotes had the currency name and their nominal printed in the languages of every Soviet Republic. This naming is preserved in modern Russia; for example: Tatar for 'ruble' and 'kopeck' are сум (sum) and тиен (tiyen). The current names of several currencies of Central Asia are simply the local names of the ruble. Finnish last appeared on 1947 banknotes since the Karelo-Finnish SSR was dissolved in 1956.
The name of the currency in the languages of the fifteen republics, in the order they appeared in the banknotes:
Language In local language IPA Transcription ruble kopeck ruble kopeck Russian рубль копейка [ˈrublʲ] ⓘ [kɐˈpʲejkə] ⓘ Belarusian рубель капейка [ˈrubʲɛlʲ] [kaˈpʲɛjka] ⓘ Ukrainian карбованець копійка [kɐrˈbovɑnet͡sʲ] ⓘ [koˈpijkɐ] ⓘ Uzbek сўм тийин [som] [tijin] Kazakh сом тиын [swʊm] [tɪjən] Kyrgyz сом тыйын [som] [ˈtɯjɯn] Tajik сӯм тин [sɵm] [tin] Georgian მანეთი კაპიკი [manetʰi] [kʼapʼikʼi] Azerbaijani манат гәпик [mɑnɑt] [ɡæpik] Turkmen манат көпүк [mɑnɑt] [kœpʏk] Lithuanian rublis kapeika [ˈrʊbɫɪs] [kɐˈpɛɪkɐ] Latvian rublis kapeika [ˈrublis] [ˈkapɛika] Estonian rubla kopikas [ˈrublɑ] [ˈkopikɑs] Finnish rupla kopeekka [ˈruplɑ] [ˈkopeːkːɑ] Romanian рублэ/rublă копейкэ/copeică [ˈrublə] [koˈpejkə] Armenian ռուբլի կոպեկ [ˈrubli] [ˈkɔpɛk]
Note that the scripts for Uzbek, Azerbaijani, Turkmen and gradually Kazakh have switched from Cyrillic to Latin since the breakup of the Soviet Union. Moldovan has switched to Latin and is once again referred to as Romanian.
These fifteen names derive from four roots:
Slavic verb рубить, rubit', "chop"
Turkic root som, "pure"
Latin monēta, "coin"
Old Ruthenian karbuvaty, "carve", "emboss", "mint"
Historical Soviet rubles
[edit]
First Soviet ruble (paper), 1917–1922
[edit]
The first ruble issued for the Soviet government was a preliminary issue still based on the previous issue of the ruble prior to the Russian Revolution of 1917. They are all in banknote form and started their issue in 1919. At this time other issues were made by the white Russian government and other governing bodies. During that time, the Russian economy suffered from hyperinflation.
Denominations were as follows: 1, 2, 3, 5, 10, 15, 25, 50, 60, 100, 250, 500, 1,000, 5,000, 10,000, 25,000, 50,000, and 100,000 rubles. Short-term treasury certificates were also issued to supplement banknote issue in 1,000,000, 5,000,000, and 10,000,000 rubles. These issue was printed in various fashions, as inflation crept up the security features were few and some were printed on one side, as was the case for the German inflationary notes.
Banknotes: In 1918, state credit notes were introduced by the RSFSR for 1, 3, 5, 10, 25, 50, 100, 250 Rbls, 500 Rbls, 1,000 Rbls, 5,000 Rbls, and 10,000 rubles. These were followed in 1919 by currency notes for 1, 2, 3, 15, 20, 60, 100, 250, 500, 1,000, 5,000, and 10,000 rubles. In 1921, currency note denominations of 5, 50, 25,000, 50,000, 100,000, 1,000,000, 5,000,000, and 10,000,000 rubles were added.
Gold ruble (chervonets), 1921–1924
[edit]
Upon launch of the New Economic Policy in 1921 came efforts to revive as currency and accounting unit the pre-war gold standard ruble, equal to 1⁄10 of a chervonets (with Rbls 10. equal to 8.602 g of 90% fine gold, then equal to US$5.14).[6] The gold ruble existed in parallel with the paper ruble of 1917–1922, which continued to depreciate versus the former, climbing to 50 billion paper rubles per gold ruble in March 1924.
Coins: The first coinage after the Russian Civil War was minted in 1921–1923 according to pre-war Czarist standards, with silver coins of 10 kop, 15 kop, 20 kop minted in 50% silver, 50 kop ("poltinnik" or Rbl 1⁄2) and Rbl 1 in 90% silver, and Rbls 10 (chervonets) in 90% gold. These coins bore the emblem and legends of the RSFSR (Russian Soviet Federative Socialist Republic) and depicted the famous slogan, "Workers of the world, Unite!". These coins would continue to circulate after the RSFSR was consolidated into the USSR with other Soviet Republics until the discontinuation of silver coinage in 1931.
Third Soviet ruble, 1 January 1923 – 6 March 1924
[edit]
The third Soviet ruble was issued equal to 1,000,000 paper rubles of 1917–1922, simply to handle the unwieldiness over the number of digits in the first currency. Again it continued to depreciate versus the gold ruble until the latter climbed to Rbls 50,000 in 1924. Only paper money was issued, in the form of state currency notes in denominations of 50 kopecks and 1, 5, 10, 25, 50, 100, 250, 500, 1,000, 5,000, and 10,000 rubles.
In early 1924, just before the next redenomination, the first paper money was issued in the name of the USSR, featuring the state emblem with six bands around the wheat, representing the languages of the then four constituent republics of the Union: Russian SFSR, Transcaucasian SFSR (Azerbaijani, Armenian, and Georgian), Ukrainian SSR and Byelorussian SSR. They were dated 1923 and were in denominations of Rbls 10,000, Rbls 15,000, and Rbls 25,000.
Fourth Soviet ruble, 7 March 1924 – 1947
[edit]
After Joseph Stalin's consolidation of power following the death of Lenin, a final redenomination occurred which replaced all previously issued currencies. The fourth Soviet ruble was equal to 50,000 rubles of the third issue, or 50 billion paper rubles of the first issue, and began at par with the gold ruble (1⁄10 chervonets). It built on the stability in the exchange value of the third ruble which happened towards the end of 1923.[6]
Coins began to be issued again in 1924, while paper money was issued in rubles for values below 10 rubles and in chervonets for higher denominations. No chervonets were issued in gold, just decrees on the parity of circulating rubles with the gold ruble, which already failed to take hold as early as 1925.
Coins, 1924–1961
[edit]
In 1924, copper and silver coins were again minted to pre-war Czarist standards, in denominations of 1⁄2 kop, 1 kop, 2 kop, 3 kop, and 5 kop (copper), 10 kop, 15 kop, and 20 kop (in 50% silver), and 50 kop, and Rbl 1 (in 90% silver). From this issue onward, the coins were minted in the name of the USSR (Union of the Soviet Socialist Republics). The "Workers of the World" slogan was carried forward. Coins issued 1921–1923 representing the gold ruble continued to circulate at par with this post-1924 ruble.
Copper coins were minted in two types; plain edge and reeded edge, with the plain-edged types being the fewest in number. The 1 Rbl coin was only issued in 1924, the poltinnik (or Rbl 1⁄2) was issued 1924–27, and the denga (or 1⁄2 kopeck) was issued 1925–28. In 1926, smaller aluminium-bronze coins were minted to replace the large copper 1 kop, 2 kop, 3 kop, and 5 kop coins, but were not released until 1928. The larger coins were then melted down.
Stalin failed to maintain the ruble's value versus the gold ruble as early as 1925, and by 1930 its value even struggled to stay above the melt value of the silver 10, 15, and 20 kop coins. Soviet authorities scapegoated "hoarders" and "exchange speculators" as responsible for the shortages, and confiscatory measures were taken. In 1931, the remaining silver coins were replaced with redesigned cupro-nickel coins depicting a male worker holding up a shield which contained the denominations of each. All silver coins were to be returned and melted down.
1926 and 1931 issues Image Value Diameter Mass Minted 1 kop 15 1 1926–1935 2 kop 18 2 1926–1935 3 kop 22 3 1926–1935 5 kop 25 5 1926–1935 10 kop 17,27 1,8 1931–1934 15 kop 19,56 2,7 1931–1934 20 kop 21,84 3,6 1931–1934
In 1935, the reverse of the 10, 15, and 20 kopeck coins were redesigned again with a simpler Art Decor-inspired design, with the obverse of all denominations also redesigned, having the "Workers of the world, unite!" slogan dropped. The change of the obverse designs did not affect all 1 kop, 2 kop, 3 kop, and 5 kop coins immediately, as some 1935 issues bore the "Workers of the World" design while some bore the new "CCCP" design. The state emblem also went through a series of changes between 1935 and 1957 as new Soviet republics were added or created, this can be noted by the number of "ribbons" wrapped around the wheat sheaves. This coin series remained in circulation during and after the monetary reform of 1947 and was finally discontinued in 1961.
1935 issue Image Value Diameter Mass Minting 1 kop 15 1 1935–1941
1945–1946 1948–1957
2 kop 18 2 1935–1941
1945–1946 1948–1957
3 kop 22 3 1935–1941 1943
1945–1946 1948–1957
5 kop 25 5 1935–1941 1943
1945–1946 1948–1957
10 kop 17,27 1,8 1935–1946
1948–1957
15 kop 19,56 2,7 1935–1946
1948–1957
20 kop 21,84 3,6 1935–1946
1948–1957
In August 1941, the wartime emergency prompted the minting facilities to be evacuated from the Neva district in Moscow and relocated to Permskaya Oblast as German forces continued to advance eastward. It only became possible to resume coin production in the autumn of 1942, for one year the country was using coins made before the war. Furthermore, the coins were made of what had suddenly become precious metals – copper and nickel, which were needed for the defense industry. This meant many coins were being produced in only limited quantities, with some denominations being skipped altogether until the crisis finally abated in late 1944. These disruptions led to severe coin shortages in many regions. Limits were put in place on how much change could be carried in coins with limits of 3 Rbls for individuals and 10 Rbls for vendors to prevent hoarding as coins became increasingly high in demand. Only high inflation and wartime rationing helped ease pressure significantly. In some instances, postage stamps and coupons were being used in place of small denomination coins. It was not until 1947 that there were finally enough coins in circulation to meet economic demand and restrictions could be eased.
Banknotes, 1924–1947
[edit]
In 1924, state currency notes were introduced for 1, 3, and 5 gold rubles (рубль золотом). These circulated alongside the chervonets (чрв) notes introduced in 1922 by the State Bank in denominations of 1 чрв, 3 чрв, 5 чрв, 10 чрв, and 25 чрв. State Treasury notes replaced the state currency notes after 1928. In 1938, new notes were issued for Rbl 1, Rbls 3, and Rbls 5, dropping the word "gold".
1938 Series Image Denomination Obverse Reverse Rbl 1 Miner Rbls 3 Soldiers Rbls 5 Pilot 1 чрв Lenin 3 чрв 5 чрв 10 чрв
Fifth Soviet ruble, 1947–1961
[edit]
Following World War II, the Soviet government implemented a confiscatory redenomination of its currency (decreed on December 14, 1947) to reduce the amount of money in circulation. The main purpose of this change was to prevent peasants who had accumulated cash by selling food at wartime prices from using this to buy consumer goods as the postwar recovery took hold.[7] Old rubles were revalued at one tenth of their face value. This mainly affected paper money in the hands of private individuals. Amounts of Rbls 3,000 or less in individual private bank accounts were not revalued, while salaries remained the same. This revaluation coincided with the end of wartime rationing and efforts to lower prices and curtail inflation, though the effects in some cases actually resulted in higher inflation. Unlike other reforms, this one did not affect coins.
Banknotes
[edit]
In 1947, State Treasury notes were introduced in denominations of Rbls 1, Rbls 3, and Rbls 5, along with State Bank notes for denominations of Rbls 10, Rbls 25, Rbls 50, and Rbls 100. The State Bank notes depicted Lenin while the Treasury notes depicted floral artistic designs. All denominations were colored and patterned in a similar fashion to late Czarist notes.
In 1957, all these notes were reissued with the old date but modified design: because of the abolition of the Karelo-Finnish SSR, the number of ribbons on the state emblem was reduced from 16 to 15, and the nominal in Finnish was removed from the obverse.
1947 Series Image Denomination Obverse Reverse Rbl 1 State Emblem of the Soviet Union Rbls 3 Rbls 5 Rbls 10 Vladimir Lenin Rbls 25 Rbls 50 Rbls 100 Moscow Kremlin
Sixth Soviet ruble, 1961–1991, (Identified as ISO code SUR)
[edit]
The 1961 redenomination introduced 1 new ruble equal to 10 old rubles and restated all wages, prices and financial records into new rubles. It differed from the confiscatory nature of the 1947 reform when banknotes were reduced to 1⁄10 of their value but wages and prices remained the same.[8] Its parity to the US dollar underwent a devaluation, however, from US$1 = 4 old rubles (0.4 new ruble) to US$1 = 0.9 new ruble (or 90 kopecks). It implies a gold parity of Rbls 31.50 per troy ounce or Rbl 1 = 0.987412 gram of gold, but this exchange for gold was never available to the general public. Banknotes and coins of this series were designed by Ivan Dubasov.
Coins
[edit]
The 1958 pattern series: by 1958, plans for a monetary reform were underway and a number of coin pattern designs were being experimented with before implementation. The most notable of these was the 1958 series, in denominations of 1 kop, 2 kop, 3 kop, and 5 kop in copper-zinc, and 10 kop, 15 kop, 20 kop, and 50 kop, and Rbl 1, Rbls 3, and Rbls 5 in copper nickel. These coins all had the same basic design and became the most likely for release. Indeed, they were mass-produced before the plan was scrapped and a majority of them were melted down. During this time, 1957 coins would continue to be restruck off old dies until the new coin series was officially released in 1961. This series is considered the most valuable of Soviet issues due to their scarcity.
On 1 January 1961, the currency was revalued again at a rate of 10:1, but this time a new coinage was introduced in denominations of 1 kop, 2 kop, 3 kop, and 5 kop in aluminium-bronze, and 10 kop, 15 kop, 20 kop, and 50 kop and 1 Rbl in cupro-nickel-zinc. Like previous issues, the front featured the state arms and title while the back depicted date and denomination. The 50 kop. and Rbl 1 coins dated 1961 had plain edges, but starting in 1964, the edges were lettered with the denomination and date. All 1926–1957 coins were then withdrawn from circulation and demonetized, with the majority melted down.
Commemorative coins of the Soviet Union: in 1965, the first circulation commemorative ruble coin was released celebrating the 20th anniversary of the Soviet Union's victory over Nazi Germany, during this year the first uncirculated mint-coin sets were also released and restrictions on coin collecting were eased. In 1967, a commemorative series of 10 kop, 15 kop, 20 kop, 50 kop, and Rbl 1 coins was released, celebrating the 50th anniversary of the Russian Revolution and depicted Lenin and various socialist achievements. The smaller bronze denominations for that year remained unchanged. Many different circulation commemorative 1 Rbl. coins were also released, as well as a handful of Rbls 3 and Rbls 5 over the years. Commemorative coins from this period were always slightly larger than general issues, 50 kop and Rbl 1 coins in particular were larger, while the 1967 series of the small denominations were the same circumference but thicker than general issues.
Initially, commemorative rubles were struck in the same alloy as other circulating coins until 1975, when its composition was changed to higher-quality copper-nickel with zinc excluded. Its specifications (31 mm diameter, 12.8 grams) were nearly identical to those of the 5-Swiss franc coin (31.45 mm, 13.2 g, cupronickel) worth approx. €4.39 or US$5.09 as of August 2018, resulting in the large scale use of (now worthless) Soviet commemorative coins to defraud automated vending machines in Switzerland years after they have been demonetized.[9]
Starting in 1991 with the final year of the 1961 coin series, both kopeck and ruble coins began depicting the mint marks (М) for Moscow, and (Л) for Leningrad.
1961 issue Image Value Diameter Mass Issued 1 kop 15 1 1961–1991 2 kop 18 2 1961–1991 3 kop 22 3 1961–1962
1965–1991
5 kop 25 5 1961–1962
1965–1991
10 kop 17,27 1,8 1961–1962
1965–1991
15 kop 19,56 2,5 1961–1962
1965–1991
20 kop 21,8 3,4 1961–1962
1965–1991
50 kop 24 4,4 1961
1964–1991
Rbl 1 27 7,5 1961
1964–1991
Banknotes
[edit]
Banknotes were issued by the USSR State Treasury (Государственный казначейский билет, Gosudarstvenny kaznacheyskiy bilet) in denominations of Rbl 1, Rbls 3 and Rbls 5, and by the USSR State Bank (билет Государственного банка, Bilet gosudarstvennogo banka) in denominations of Rbls 10, Rbls 25, Rbls 50 and Rbls 100. Colors are similar to the previous series but notes were much smaller in size.
1961 Series Image Value Watermark Withdrawn Obverse Reverse Rbl 1 dark and light
5-pointed stars
December 31, 1993 Rbls 3 Rbls 5 Rbls 10 Rbls 25 July 26, 1993 Rbls 50 Face of Lenin January 23, 1991 Rbls 100
1989 Unreleased Soviet Rubles
[edit]
After the failed project of making the 50th anniversary banknotes for 1967,[10] the projects for the 30 ruble in 1988 were worked out in Goznak. The first ruble that was projected as an example of the 1967 project, breaking with old Soviet tradition. They decided to put other faces which in the first note was Tsiolkovsky's statue. For unknown reasons it was cancelled and archived in the "failed projects" archive with barely any prints after a debate around the prototype of the note. At the same time they tried to adopt a more traditional 30 Soviet ruble banknote which replaced the whole face-project with the Kremlin Tower. Although the project was already started in 1988 and was finalized in 1989, it had some potential and intention to be adopted but the Gosbank decided to not put in practice and was cancelled. Even in 1988, a lot of projects were started with the Tsiolkovsky monument banknotes but were never recovered and was certainly rejected as a proposal and only the 30 note remained while other variations got lost.
"Central Bank of Russia" project (1990)
[edit]
The whole concept was to adopt a new Soviet ruble under the "Central Bank of Russia" which is still questioned. Although, there aren't only one type of banknotes and some of these prototype notes were discovered in different places, even though its authenticity is still questioned as of one of the most outstanding banknotes of this (20, representing M.N Kutuzov)[11] series also becoming one of the most controversial ones because it was found in a professional banknote collector's album, as it was randomly discovered. The whole project was canceled because the name "Central Bank of Russia" and the different faces caused a lot of outrage as it was promoted as "Russian" and not Soviet, and was not promoting Lenin's head and tried to build up a totally whole new concept around the new 1991 series.[10]
1991 Forgotten Soviet banknote project
[edit]
In 1989, designers sat at a table to draw a new type of Soviet banknote which represented buildings rather than people. Only the 1 and 2 ruble notes were designed. The 2 ruble note was designed in 1989 and could have been released in 1991. It was a very unusual sketch that combines the working man and the Kremlin as the whole unity of the country, the banknotes was drawn by V.K Nikitin. The 1 ruble note was designed back in 1989 by I.S Krylov and was planned to be released in 1991. The artist was chief of the artists of Goznak, one of the creators of the Soviet ruble banknotes between 1947 and 1991. He also painted a number of postage stamps in the same period.[12]
Seventh Soviet ruble, 1991–1993
[edit]
The Monetary Reform of 1991 was carried out by Mikhail Gorbachev and was known also as the Pavlov Reform. It was the last of such in the Soviet Union and began on January 22, 1991. Its architect was Minister of Finance Valentin Pavlov, who also became the last prime minister of the Soviet Union. The details included a brief period to exchange old 1961-dated Rbls 50. and Rbls 100 notes for new 1991 notes — for three days from 23 to 25 January (Wednesday to Friday) and with a specific limit of no more than Rbls 1,000 per person—the ability to exchange other notes considered in the special commissions to the end of March 1991. See Monetary reform in the Soviet Union, 1991.
Coins
[edit]
In late 1991, a new coinage was issued as direct obligations of the USSR State Bank in denominations of 10 kop and 50 kop, and Rbl 1, Rbls 5, and Rbls 10. The 10 kop coin was struck in brass-plated steel, the 50 kop coin, and Rbl 1 and Rbls 5 coins were in cupro-nickel. The Rbls 10 coin was bimetallic with an aluminium-bronze centre and a cupro-nickel-zinc ring. The series depicts an image of the Kremlin on the obverse rather than the Soviet state emblem. However, this coin series was extremely short-lived as the Soviet Union ceased to exist only months after its release. It did, however, continue to be used in several former Soviet republics including Russia and particularly Tajikistan for a short time after the union had ceased to exist out of necessity.
Banknotes
[edit]
New 1991-dated banknotes were all issued as USSR State Bank notes (including the 1, 3, and 5-ruble denominations), with nearly identical colours and size for all denominations, but included more colour and heightened security features. The 25 Rbl note was omitted from this series, but still remained legal tender; all 1961 notes apart from the demonetized Rbls 50 and Rbls 100 denominations remained in circulation. An important modification of the design included the removal of the texts in languages of other Soviet republics (i.e. all texts were in Russian only) in the 1992 issues; all 1991 notes (in exception to the 2nd 1991 Rbls 100 banknote) contained all Soviet languages. In this series, Rbl 1. notes were issued on 27 June 1991, Rbls 3 notes on 3 November 1991, Rbls 5. notes on 5 July 1991, Rbls 10 notes on 10 July 1991, Rbls 50 and Rbls 100 notes on 23 January 1991, Rbls 200 notes on 29 October 1991, and Rbls 500 notes on 24 December 1991. Rbls 1,000 notes were issued in March 1992, after the Soviet collapse. New 1992-dated notes, similar in appearance to the 1991 issues, were printed in denominations of Rbls 50–1,000. bearing the Soviet state emblem and name. A notable exception was that the more-colourful Rbls 100. note of this series was still dated 1991 unlike the others.
After the breakup of the Soviet Union, many newly independent republics chose to continue circulating Soviet rubles even after the introduction of the new Russian ruble in 1992.
1991 Series Image Value Watermark Issued Withdrawn Obverse Reverse Rbl 1 5-pointed stars
and wavy stripes
27 June 1991 31 December 1993 Rbls 3 3 November 1991 Rbls 5 5 July 1991 Rbls 10 dark and light
5-pointed stars
10 July 1991 Rbls 50 Face of Lenin 23 January 1991 26 July 1993 Rbls 100 Rbls 200 30 November 1991 Rbls 500 24 December 1991 Rbls 1,000 19 March 1992
1992 Soviet rubles
[edit]
After the collapse of the Soviet Union, new banknotes were implemented using the old 1991 model even after the collapse. These are stamped with a denomination symbol and all languages of the former union were removed except Russian language. Even after the USSR ceased to exist, it was still titled as the money of the USSR. These were temporary issues as already in the same year, new notes were implemented. After the Monetary Reform of 1993, these notes were out of circulation and were free to exchange with the new 1993 issues.
1992 Series Image Value Watermark Issued Withdrawn Obverse Reverse Rbls 50 5-pointed stars
and wavy stripes
July 1, 1992 26 July 1993 Rbls 100 dark and light
5-pointed stars
March 4, 1992 Rbls 200 5-pointed stars
and wavy stripes
July 1, 1992 Rbls 500 dark and light
5-pointed stars
Rbls 1000
Economic role
[edit]
The Soviet Union ran a planned economy, where the government controlled prices and the exchange of currency. Thus the Soviet ruble did not function like a currency in a market economy, because mechanisms other than currency, such as centrally planned quotas, controlled the distribution of goods. Consequently, the ruble did not have the utility of a true currency; instead, it more resembled the scrip issued in a truck system. Soviet citizens could freely purchase a set of goods from state shops with rubles, but choice was limited and prices were always political decisions, having no direct connection to manufacturing cost. Bread and public transport were heavily subsidised, but wages were low and there were shortages of manufactured consumer goods, implementing hidden taxes.[13] It was common to hold large savings in rubles in the State Labor Savings Banks System of the USSR because credit was not available. Special rubles used in accounting were not exchangeable to cash, and were effectively different currency units pegged to the ruble. The currency was not freely exchangeable and its export was illegal. In bilateral trade, a separate, non-convertible "clearing ruble" credit was used.[14] There were separate shops (Beriozka) for purchasing goods obtained with hard currencies. However, Soviet citizens could not legally own foreign currency. Thus, if they legally received payment in foreign currency, they were forced to convert it to Vneshposyltorg cheques at a rate set by the government. These cheques could be spent at a Beriozka. The sudden transformation from a Soviet "non-currency" into a market currency contributed to the economic hardship following the dissolution of the Soviet Union in December 1991.[13][15][16]
Exchange rates
[edit]
The Soviet Union officially valued the ruble in the planned economy at an average of US$1.35 (or Rbl 0.74 per US dollar; see below) from 1971 to 1988. However, as the ruble was not internationally exchangeable and as Soviet citizens could not legally own foreign currency, rubles changed hands in the black market at an average of Rbls 4.14 per dollar in the same period 1971–88.[17] The opening up of the economy in the late 1980s under perestroika resulted in the recognition of more realistic exchange rates for the ruble, as follows:
In November 1989 the ruble was devalued for foreign travel to a tourist rate of Rbls 6.26 per dollar (versus Rbl 0.6277 officially).[18]
In November 1990 a new commercial exchange rate of Rbls 1.80 per dollar was introduced. During this time, however, black market dollars changed hands at 20 Rbls.[19]
In April 1991, following the failed monetary reform of 1991, the tourist exchange rate was raised significantly to Rbls 27.60 per dollar, making the average monthly Soviet salary of Rbls 330 worth only $12 on the international market.[20]
Further pain would continue later that year with the dollar changing hands at Rbls 35-40 on the black market and Rbls 45-70 in government auctions as of October 1991.[21]
By early December 1991, just before the Soviet Union ceased to exist, the ruble was valued at nearly Rbls 100 to the dollar.[22]
Official exchange rates Soviet ruble of the time per United States dollar:[23]
Date Rbls of the time per US$ US$ per Rbl of the time 1924-01-01 Rbls 2.2000 $0.4545 1924-04-01 Rbls 1.9405 $0.5153 1927-01-01 Rbls 1.9450 $0.5141 1928-02-01 Rbls 1.9434 $0.5145 1933-04-01 Rbls 1.9434 $0.5145 1933-05-01 Rbls 1.7474 $0.5722 1934-01-01 Rbls 1.2434 $0.8042 1935-01-01 Rbls 1.1509 $0.8689 1936-01-01 Rbls 1.1516 $0.8684 1937-01-01 Rbls 5.0400 $0.1984 1937-07-19 Rbls 5.3000 $0.1887 1950-02-01 Rbls 5.3000 $0.1887 1950-03-01 Rbls 4.0000 $0.2500 1960-12-01 Rbls 4.0000 $0.2500 1961-01-01 Rbl 0.9000 $1.1111 1971-12-01 Rbl 0.9000 $1.1111 1972-01-01 Rbl 0.8290 $1.2063 1973-01-01 Rbl 0.8260 $1.2107 1974-01-01 Rbl 0.7536 $1.3270 1975-01-01 Rbl 0.7300 $1.3699 1976-01-01 Rbl 0.7580 $1.3193 1977-01-01 Rbl 0.7420 $1.3477 1978-01-01 Rbl 0.7060 $1.4164 1979-01-01 Rbl 0.6590 $1.5175 1980-01-03 Rbl 0.6395 $1.5637 1981-01-01 Rbl 0.6750 $1.4815 1982-01-01 Rbl 0.7080 $1.4124 1983-01-13 Rbl 0.7070 $1.4144 1984-01-01 Rbl 0.7910 $1.2642 1985-02-28 Rbl 0.9200 $1.0870 1986-01-01 Rbl 0.7585 $1.3184 1987-01-01 Rbl 0.6700 $1.4925 1988-01-06 Rbl 0.5804 $1.7229 1989-01-04 Rbl 0.6059 $1.6504 1990-01-03 Rbl 0.6072 $1.6469 1991-01-02 Rbl 0.5605 $1.7841 1991-02-13 Rbl 0.5450 $1.8349 1992-01-01 Rbl 0.5549 $1.8021
Replacement currencies in the former Soviet republics
[edit]
Shortly after the fall of the Soviet Union in 1991, local currencies were introduced in the newly independent states. Most of the new economies were weak and hence most of the currencies have undergone significant reforms since their introduction. In the very beginning of the post-Soviet economic transition, it was widely believed by ordinary people and monetary institutions (including the International Monetary Fund) that it was possible to maintain a common currency working for all or at least for some of the former Soviet Union's countries.[citation needed] The wish to preserve the strong trade relations between former Soviet republics was considered the most important goal.[citation needed]
During the first half of 1992, a monetary union with 15 independent states all using the ruble existed. Since it was clear that the situation would not last, each of them used their positions as "free-riders" to issue huge amounts of money in the form of credit (since Russia held the monopoly on printing banknotes and coins). As a result, some countries were issuing coupons in order to "protect" their markets from buyers from other states. [citation needed] This also started to cause massive inflation in the formerly high-valued currency. The Russian central bank responded in July 1992 by setting up restrictions on the flow of credit between Russia and other states. The final collapse of the "ruble zone" began with the exchange of banknotes by the Central Bank of Russia on Russian territory at the end of July 1993. As a result, other countries still in the ruble zone (Kazakhstan, Uzbekistan, Turkmenistan, Moldova, Armenia and Georgia) were "pushed out".[citation needed] By November 1993 all newly independent states had introduced their own currencies, with the exception of war-torn Tajikistan (May 1995) and unrecognized Transnistria (1994). Due to ruinous inflation in the former Soviet Republics, most of the successor currencies had to be redenominated at least once, with the notable exceptions of the Armenian dram, Estonian kroon, Kazakh tenge, and Kyrgyz som.
Details on the introduction of new currencies in the newly independent states are discussed below.
Post-Soviet
country First national currency (with new code)
replacing the "Soviet ruble" (SUR) Conversion rate
from SUR Date introduction for new currency Date leaving
the "ruble zone"[4] Future revaluation or currency replacement
date, new replaced currency
and rate[24] Armenia Armenian dram
(AMD) 200 SUR
= 1 AMD 22 November 1993 November 1993 - Azerbaijan Second Azerbaijani manat
(AZM) 10 SUR
= 1 AZM 15 August 1992 August 1993 1 January 2006:
Third Azerbaijani manat (AZN)
5,000 AZM = 1 AZN Belarus Belarusian ruble
(BYB) 10 SUR
= 1 BYB 25 May 1992 26 July 1993 2000:
Second Belarusian ruble
(BYR)
1,000 BYB = 1 BYR
2016:
Third Belarusian ruble (BYN)
10,000 BYR = 1 BYN Estonia Estonian kroon
(EEK) 10 SUR
= 1 EEK 20 June 1992 22 June 1992 1 January 2011:
Euro (EUR)
15.6466 EEK = 1 EUR Georgia Georgian kuponi
(GEK) 1 SUR
= 1 GEK 8 April 1993 20 August 1993 20 October 1995:
Georgian lari (GEL)
1,000,000 GEK = 1 GEL Kazakhstan Kazakh tenge
(KZT) 500 SUR
= 1 KZT 15 November 1993 November 1993 - Kyrgyzstan Kyrgyz som
(KGS) 200 SUR
= 1 KGS 10 May 1993 15 May 1993 - Latvia Latvian ruble
(LVR) 1 SUR
= 1 LVR 7 May 1992 20 July 1992 5 March 1993:
Latvian lats (LVL)
200 LVR = 1 LVL
1 January 2014:
Euro (EUR)
0.702804 LVL = 1 EUR Lithuania Lithuanian talonas
(LTT) 10 SUR
= 1 LTT 1 May 1992 1 October 1992 26 June 1993:
Lithuanian litas (LTL)
100 LTT = 1 LTL
1 January 2015:
Euro (EUR)
3.4528 LTL = 1 EUR Moldova Moldovan cupon
(MDC) 1 SUR
= 1 MDC 10 June 1992 July 1993 29 November 1993:
Moldovan leu (MDL)
1,000 MDC = 1 MDL Russia First Russian ruble
(RUR) 1 SUR
= 1 RUR 14 July 1992 August 1993 1 January 1998:
Second Russian ruble (RUB)
1,000 RUR = 1 RUB Tajikistan Tajik ruble
(TJR) 100 SUR
= 1 TJR 10 May 1995 January 1994 30 October 2000:
Tajikistani somoni (TJS)
1,000 TJR = 1 TJS Turkmenistan First Turkmenistani manat
(TMM) 500 SUR
= 1 TMM 1 November 1993 November 1993 1 January 2009:
Second Turkmenistani manat (TMT)
5,000 TMM = 1 TMT Ukraine Kupono-karbovanets
(UAK) 1 SUR
= 1 UAK 12 January 1992 November 1992 2 September 1996:
Ukrainian hryvnia (UAH)
100,000 UAK = 1 UAH Uzbekistan Uzbek sum-kupon
(UZC) 1 SUR
= 1 UZC 15 November 1993 15 November 1993 1 July 1994:
Uzbekistani sum (UZS)
1,000 UZC = 1 UZS
See also
[edit]
Hyperinflation in early Soviet Russia
List of commemorative coins of the Soviet Union | ||||||
9245 | dbpedia | 1 | 28 | https://www.themoscowtimes.com/2014/12/10/russian-rubles-800-year-history-haunts-current-plunge-a42175 | en | Russian Ruble's 800-Year History Haunts Current Plunge | [
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"Howard Amos"
] | 2014-12-10T00:00:00 | Sergei Sorokoumov has devoted the last quarter of a century to an attempt to raise Russian's pride in the ruble, the country's national currency since the 13th century. | en | https://static.themoscowtimes.com/img/icons/favicon.ico | The Moscow Times | https://www.themoscowtimes.com/2014/12/10/russian-rubles-800-year-history-haunts-current-plunge-a42175 | Sergei Sorokoumov has devoted the last quarter of a century to an attempt to raise Russian's pride in the ruble, the country's national currency since the 13th century.
Recently Sorokoumov's efforts seem to have become a thankless task. The Russian currency has lost over 40 percent against the U.S. dollar this year despite the Central Bank spending over $70 billion of Russia's currency reserves in a bid to slow the plunge.
Dimitrovgrad, a southern Russia town near the Volga River, erected a statue to the ruble in 2004 on Sorokoumov's suggestion and aided by his links to the local mayor. Ten years later and Sorokoumov is campaigning for a similar monument to be put up in nearby Samara.
An official laying ceremony for the foundation stone was even planned for July, but the project has run into local opposition and is no longer likely to be realized.
As the ruble's devaluation becomes a priority for the Kremlin and begins to hit Russian consumers in the form of price rises, any chance of the project's revival appears slim.
"The ruble today is not properly valued and is not managed by those who have the interests of the people at heart," Sorokoumov, a retired Samara university professor and accountant by profession, told The Moscow Times in a telephone interview on Wednesday.
His work on the ruble, and the monuments in Dimitrovgrad and Samara, are all directed toward
boosting the ruble as a symbol and building popular belief in the currency, he said.
"When belief is lost, even the Central Bank cannot do anything," Sorokoumov said.
Long History
With its origins in the 13th century, the ruble is one of the oldest currencies in Europe.
The word itself is said to come from the Russian word юубить/rubit, meaning "to cut or chop," as rubles were originally bits of coins snipped off from the hryvna, the currency used by the medieval Kievan Rus.
Rubles were first minted as a currency in their own right in the 14th century — albeit by several small states in competition. In 1654, the first copper kopeks appeared. Following the sweeping monetary reforms of Peter the Great at the beginning of the 18th century, all rubles were minted with the figure of the reigning emperor or empress. In 1769, the first paper rubles were printed.
In the late 19th century, the reforming tsarist minister Sergei Witte brought Russia onto the gold standard, but the ruble came crashing down with the Russian Empire in 1917 and subsequent civil war. In 1917, a U.S. dollar was worth 11 rubles — by 1923 a dollar was worth more than 2 million rubles.
The Soviet authorities eventually regained their grip over the ruble, though the currency was only used internally. A special currency was used for foreign transactions, and the government
maintained close control over the exchange rate.
Re-Denomination?
Russia has undergone at least four re-denominations in the last century, and recent ruble falls have sparked some tentative talk about another such move.
State Duma Deputy Roman Khudyakov suggested earlier this month that the currency could be re-denominated with little harm to ordinary Russians.
The call, however, elicited scorn from economists. Re-denomination in the current situation would be "pointless" and "totally stupid," said Konstantin Sonin, vice rector at the Higher School of Economics.
"If we had inflation of 1,000 percent a year then it would make sense to remove a few zeroes," he added. While inflation has ticked upward this year, the rate is still under 10 percent.
In 1998, three zeroes were lopped off the currency after rapid inflation.
Similar changes were made under the Soviet regime in 1947 and 1961 as well as in the so-called Pavlov reform of 1991 when Mikhail Gorbachev made higher-value ruble notes almost worthless overnight.
Defending the Ruble
The approach of Russia's financial authorities to the ruble since the fall of the Soviet Union has been marked by attempts to control the currency's value — sometimes successful, sometimes not.
In 1998, Russia simply ran out of foreign currency reserves with which to defend the ruble — leading to a default and runaway inflation. The authorities took a similar approach, albeit more successful, during the global financial meltdown in 2008 when the Central Bank's committed about $200 billion to slow the currency's decline.
But last month, on Nov. 10, the Central Bank announced that the ruble would become a free-floating currency for the first time in modern Russian history.
As long as the Central Bank does not slide back into regular market interventions, a floating exchange rate means Russia's budget can more easily cope with a volatile oil price.
Quintessentially Russian
"The ruble is the most ancient symbol of Russian statehood," according to ruble historian Sorokoumov, adding that it is as important for Russia's identity as the Russian language.
Over recent years, Russian officials have sought to boost the ruble's profile on the world stage.
In 2009, then-President Dmitry Medvedev pushed for the ruble to become an international reserve currency, criticizing the world's dependence on the dollar.
The Kremlin has also pushed ahead with plans to forge a global financial center in Moscow, and last year the Central Bank launched an official symbol for the ruble.
But Sorokoumov lamented that more had not been done and warned that the current situation was very serious — similar to that experienced under the struggling Soviet Union in 1991 and tsarism in 1913 before the maelstrom of the First World War.
"If you want to kill a country, kill its currency," he said. | ||||
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"Anastasiia Ilina"
] | 2018-05-13T20:06:56+00:00 | Read our guide to obtaining and spending Russia's currency the rouble. | en | /img/apple-touch-icon.png | Culture Trip | https://theculturetrip.com/europe/russia/articles/rub-explaining-the-rouble-russias-currency | The Russian rouble has had a rocky few years since the start of international sanctions on Russia. The exchange rate was as unpredictable as the weather for a while. Currently, the exchange rate is very favourable for visitors buying roubles with a strong currency, and a trip to Russia will prove to be money well spent.
A brief history
The first mention of the rouble dates back to the time when Russia was divided into a number of independent states. The city of Novgorod oval silver casts, called grivnas, were in use. Those could be further cut down into smaller pieces, which were referred to as roubles, meaning something that has been cut. In the 16th century, after all of Russia’s lands were united under one tsar, a currency reform was necessary. One rouble was used as a counting name for 100 smaller coins, kopeks, which are still in use today. Yet, a separate rouble coin only appeared in the 18th century, during the reign of Peter the Great. These new rouble coins were the equivalent of 28 grammes of silver and equal to 100 kopek coins made of copper. The content of silver in the rouble varied throughout time. Later in the 18th century, government banks began to issue paper money, called the assignation rouble, which in turn was replaced by state credit notes in 1843. After the Russian revolution of 1917 and the formation of the Soviet Union, the Soviet rouble replaced the Imperial rouble. The Soviet rouble was used in all 15 Soviet states, and some continued using it after the fall of the Union in 1991.
The rouble today
The rouble we know now co-existed with the Soviet rouble for two years. As the country was undergoing a challenging transition to a new political and economic system, citizens were also gradually cashing in their Soviet roubles in exchange for the new ones. A hard time started for the rouble in 2014 after crippling economic sanctions were imposed on Russia following the annexation of Crimea. The rouble significantly lost its value in comparison to other world currencies, as a result causing retailers to increase their prices, although salaries and pensions remained the same. The current exchange rates hover around 50-60 roubles for 1 US dollar.
Notes
The banknotes used in Russia now first appeared in 1998. The size and design of the notes are the same for all the values. They do differ, through, in colour and in the images used on the notes. Each note is dedicated to a particular city with prominent landmarks depicted on either side. The most common banknotes in use are the 50, 100, 500, 1000 and 5000 notes. The 10-rouble note can also sometimes be seen, but is gradually being replaced with a coin of equivalent value. In 2017, two new additions were made: a 200- and 2000-rouble banknote, yet these two are still a rare sight and are gradually being introduced into circulation.
What will your money get you?
50 rubles (approx. US$0.80)
In today’s economy, 50 roubles won’t get you very far. Especially when exploring touristy areas of a city, prices will be slightly escalated and higher than in a more residential neighbourhood. In most cities, with the exception of Moscow, it will be just enough to buy a one-way bus or subway ticket, so always have one handy when travelling on public transport.
100 rubles (approx. US$1.60)
See privacy policy.
Most basics in a grocery store will cost less, or around 100 roubles. You could get a bottle of water, a snack bar, some fruit and maybe even a coffee in a local chain. It will also be enough to buy a return ticket on a suburban train to explore the environs of a city.
500 rubles (approx. US$8)
A more useful amount to spend, 500 rubles can easily buy a breakfast, lunch or even an inexpensive dinner. Most tickets to museums will cost within the 500-ruble range, although sometimes very popular attractions feel confident to charge even more than that. In rainy weather, 5o0 rubles can also get you a short cab ride within a 20-30 minutes’ driving distance.
1000 rubles (approx. US$16)
Just over 1000 roubles is an amount you would spend on a nice dinner with wine or will get your groceries for the week. It really depends on how you choose to spend it. A couple thousand is also a good amount to put aside on your trip if you’ll be getting souvenirs sometime down the road.
5000 roubles (approx. US$80)
A 5000-rouble note can get you a lot of things, so it’s best not to carry these around in large stashes. It would pay for a few nights in a standard hotel or buy a ticket from St Petersburg to Moscow by high-speed train.
Tips for splashing your cash
It’s useful to have cash on you, as many small businesses, like street stalls, won’t accept credit cards. The buses also still run on a cash system, and tickets are purchased on board. Make sure to have a smaller note for these occasions, as vendors may simply not have enough change to give you.
Be careful about where you exchange your money. Do so only at a bank, hotel or proper exchange office. Street traders may give you a good rate, but they may also hand over fake currency. Remember that exchanges in other currencies are illegal, so don’t become an accomplice.
Tipping is customary in Russian restaurants, as wages are often fairly low. Aim for the usual 10%, or 15% if you’ve had exceptional service. Coffee shops and on-the-go places will usually have a tip jar, but don’t feel obliged to tip in a place with no wait staff. | ||||
9245 | dbpedia | 0 | 33 | https://www.npr.org/2022/04/01/1090312774/when-bricks-were-rubles | en | Following the collapse of the USSR, a new Russian bartering system was born : Planet Money : NPR | [
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""
] | null | [
"Dave Blanchard",
"Kenny Malone"
] | 2022-04-01T00:00:00 | For a brief, strange period after the U.S.S.R. collapsed, "real" money was less valuable than tradeable objects like bricks or towels. We look back at the Russian barter economy and we see the nature of money and value underneath all currency. | Subscribe to our weekly newsletter here. | en | NPR | https://www.npr.org/2022/04/01/1090312774/when-bricks-were-rubles | When the USSR collapsed, the ruble tanked and items like bricks became a more desirable form of payment. The post-Soviet economy became a laboratory for curious experiments in money. A barter economy briefly emerged. Then a gas-backed currency. All this in less than 10 years.
Today, what this strange, short period in Russia's history can teach us about all currencies, and about what makes an economy and its money valuable.
Music: "New Pulse" "A Dream of Bronze" and "Tailwind."
Find us: Twitter / Facebook / Instagram / TikTok
Subscribe to our show on Apple Podcasts, Spotify; and NPR One. | |||||
9245 | dbpedia | 3 | 5 | https://www.elibrary.imf.org/view/journals/024/1960/001/article-A004-en.xml | en | Russian Gold and the Ruble | [
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] | null | [
"Oscar L. Altaian"
] | 1960-01-01T00:00:00 | THERE HAS BEEN an increasing amount of comment in the world press about the possibility that the U.S.S.R. may introduce a gold ruble, and widespread speculation about the effects of such an action. The anticipated effects upon the noncommunist world have, on the whole, been described in gloomy terms. They have included such fears as that the introduction of a convertible ruble may tend to weaken the U.S. dollar, open the way for speculative “bear” attacks on the dollar and major European currencies, upset world commodity markets and prices, and touch off widespread disturbances of trade. Fears of this kind have been summarized in the phrase that a convertible ruble would be a monetary sputnik. | en | /fileasset/fileasset/IMF_Seal_blue.png | IMF eLibrary | https://www.elibrary.imf.org/view/journals/024/1960/001/article-A004-en.xml | Production
Although there continue to be wide differences of opinion about the amount of gold currently produced in the U.S.S.R., as well as about the trend of output in the postwar period, a good deal is known about production prior to World War II. The U.S.S.R. was, of course, one of the world’s large producers before 1914, and its output in that year (at the present price of $35 per ounce) was $75 million. Production dropped rapidly during 1914–18 and the subsequent years of revolutionary fighting, falling to $3 million in 1921. By the end of the 1920’s, output had recovered to prewar levels, and it expanded rapidly during the 1930’s; it was $270 million in 1936 and $220 million in 1937.1 The Soviet authorities have published no information on gold production since that date. There is little doubt that, if the U.S.S.R. had continued to apply the necessary priorities, it could have expanded gold production further. A leading Soviet textbook on economic geography, written in 1939, stated that “the U.S.S.R. has the world’s largest reserves of gold … The U.S.S.R. is second only to the Union of South Africa in the mining of gold, having already surpassed Australia, Canada, and the United States.”2 Littlepage, whose engineering experience in gold mining in the Soviet Union in the 1930’s is second to none, is authority for the statement in 1938 that the U.S.S.R. could have made further substantial increases in gold production, possibly to the level of output in South Africa, by the end of that decade.3 (At the time Littlepage made this estimate, production in South Africa was at an annual rate of more than $400 million, reaching $504 million in 1941.) Such further expansion, however, was not attained. By 1939–40, output was perhaps 15–25 per cent lower than at its peak in 1936.4
No high degree of accuracy can be claimed for any of the widely varying estimates of current Soviet gold production, which range from $215 million to $630 million per year.5 However, even the lowest estimate places the U.S.S.R. among the major producers of gold. Samuel Montagu & Co. estimated 1958 production as more than 17 million ounces (about $600 million);6 and other writers estimate production in that year at 12–15 million ounces ($420–520 million).7 The U.S. Bureau of Mines estimated production in 1958 at about $350 million.8 Alec Nove stated that it is quite possible that actual gold sales by the U.S.S.R. in recent years have been “roughly equal to current production,”9 which would imply an annual output of perhaps $250 million or $300 million. Finally, according to a report in The Northern Miner,10 Soviet gold production is at the most 6 million ounces per year ($215 million).
Estimates of the trend of Soviet gold output in recent years have been similarly conflicting. According to the reports of the U.S. Bureau of Mines, annual production of $140 million in 1942–44 increased steadily to $330 million in 1951 and 1952; in the next three years, production was slightly lower, or about $315 million per year; in 1956–58, production was at the rate of $350 million per year.11 In contrast, a German study in 1959 estimated that production increased from $80 million in 1950 to $350 million in 1956 and 1957.12 An opposite trend is suggested in a 1957 news report that “there are indications that Soviet gold production may have dropped in recent years because of a cut in manpower,”13 and in a 1958 report, which said that gold output had been falling since 1953.14
In 1957, the Soviet authorities announced that the department concerned with gold mining was being reorganized; and the new head responsible for operations stated that by 1960 he hoped to achieve a sharp increase in output and a 25 per cent reduction in costs of production.15 In late 1959, it was stated that output in some gold fields would be 12 per cent higher than in 1956, and that the use of electric dredges under construction would reduce production costs.16
The growth of Soviet gold production is reported to be largely the result of the expansion of placer mining in Siberia. Although some gold is obtained from deep mining, there has been nothing to suggest that the Soviet Union has deep gold-bearing ores which can compare in either quality or quantity with those of South Africa. About 75 per cent of Soviet gold production is said to be concentrated in the sub-Arctic Far East area, where costs of transportation are high and working conditions severe.
Gold is also obtained as a by-product of mining nonferrous metals. Since the output of nonferrous metals is large and expanding, the production of by-product gold cannot help but be significant. In periods of prosperity, by-product gold is 35–40 per cent of total gold output in the United States and about 13 per cent in Canada. In the U.S.S.R., according to some estimates, it is 10–15 per cent.
The thesis has recently been advanced that Soviet gold mining costs are very high. One estimate puts the cost of production as equivalent to at least $166 per ounce at the official rate of exchange.17 There is, of course, no way of determining the accuracy of calculations, which are obviously guesses on a grand scale, of the costs expressed in rubles. Furthermore, the conversion of ruble costs into dollars at the official rate of exchange raises serious difficulties, and has on many occasions led to questionable, if not meaningless, results. Finally, direct cost calculations of this type, even when accurate, are not good guides to Soviet export-import policies. There is some dissatisfaction in the U.S.S.R. with the principles and procedures for determining costs, which differ from those in other countries. In any case, it is not the absolute cost of gold production that determines whether it is advantageous to produce gold for export, but rather the cost of producing gold relative to the cost of producing other commodities. If the cost of producing gold, equivalent to the ruble cost converted at the official exchange rate, is five times the world price, while that of timber is six times that price, it will be more economical for the U.S.S.R. to pay for imports with gold rather than with timber.
It is clear that the U.S.S.R. places substantial emphasis upon continuing and expanding the production of gold, which is used for export, stockpiling, and maintaining a gold connection for the ruble.
Sales
The U.S.S.R. has sold substantial amounts of gold in London, Zurich, and other financial centers in recent years. No official data have been released on the amount of these sales, but estimates have been made in the West from and by a number of different sources. Though these estimates are less speculative than those of gold production, they vary widely and have been subject to large retrospective corrections, both up and down. Estimates for 1957 indicate that gold sales were 712 million ounces, valued at $260 million; these were the largest in any postwar year up to that time. Sales in 1958 are estimated at $215 million, and those in 1959 were probably somewhat larger than sales in 1957.18
The U.S.S.R. sells gold to acquire foreign exchange with which to meet deficits in its balance of payments. To the maximum extent possible, gold is sold forward to obtain the price premium which has prevailed in recent years, but its forward sales are supplemented by spot sales when necessary.19 The U.S.S.R. apparently does not wish to create the impression that it exports gold fairly regularly, and its published plans neither suggest nor require the export of gold. Though, in time, it may again provide data on gold production or sales, its official attitude continues to be one of strict secrecy. The U.S.S.R. finds gold an admirable medium (leaving aside considerations of comparative costs) for meeting relatively small payments deficits. Sales of gold can be made without publicity, and they do not call attention to deficits in the Soviet balance of payments or to any particular events which may have caused them. This advantage of gold sales for the U.S.S.R. is mirrored by the fact that Western estimates of their magnitude vary so widely. Also, sales can be made quickly, without significantly affecting the market price of gold. They do not affect established commodity market relationships or trading channels. They provoke no political outcries on the part of the countries or producers whose products are affected. For example, public reaction to Soviet sales of aluminum and tin in 1957–58 was completely different from the reaction to sales of gold, even though the former were a much smaller percentage of world production than the latter. Sales of aluminum and tin were widely regarded as unfair competition or economic warfare.20 On the other hand, sales of gold totaling as much as $250 million per year—equal to about 25 per cent of the output of the rest of the world—tend to be accepted in rational, economic terms; indeed, they may even be considered helpful.
The U.S.S.R. has been an exporter of gold for many years, though the amount sold has varied greatly from year to year. The following estimate of Soviet gold exports in the 1930’s was made on the basis of admittedly incomplete data:21
Year Exports
(million
U.S. dollars) Year Exports
(million
U.S. dollars) 1931 100 1936 10 1932 80 1937 210 1933 70 1938 120* 1934 85 1939 55 1935 25 1940 55
Year Exports
(million
U.S. dollars) Year Exports
(million
U.S. dollars) 1931 100 1936 10 1932 80 1937 210 1933 70 1938 120* 1934 85 1939 55 1935 25 1940 55
According to these data, gold exports by the U.S.S.R. in the 1930’s totaled $800 million, or about 8 per cent of production in the rest of the world. Exports of gold were particularly heavy in 1937 and 1938, years marked by trials, purges, and disorganization of production. In these two years, exports were $330 million, equal to 15 per cent of production in the rest of the world, though if allowance is made for the gold which was obtained from Spain during the Civil War and apparently hoarded, the U.S.S.R. was a net importer.
In the 11 years 1946–56, the U.S.S.R. probably sold about $800 million of gold, equivalent to 9 per cent of gold production outside the Soviet bloc. Average sales in this period were about $75 million per year, and this low figure reflects the fact that sales were negligible in the early postwar years. In the three years 1957–59, gold sales totaled more than $700 million, equivalent to 20–25 per cent of gold production outside the Soviet bloc, and average annual sales were about $245 million.
These estimates may give a misleading impression of the present importance of gold exports in the Soviet balance of payments. Exports of gold were relatively much more important in paying for Soviet imports in the 1930’s than they have been in the postwar period. In 1957, when gold sales were $260 million, exports to countries outside the Soviet bloc were about $2 billion at the official rate of exchange, and total Soviet exports were $4.4 billion. In 1938, when gold sales were at least $120 million, exports to all countries were only $250 million; in 1937, the ratio of gold sales to exports was even larger.22
As a major exporter of gold, the U.S.S.R. naturally has an interest in the price of gold,23 though there have been no official expressions of opinion about the present price of $35 an ounce. Indeed, it may well be felt that any argument advanced by the U.S.S.R. might actually damage in some quarters the case for a higher price. Nevertheless, in 1958, the Deputy Premier of the U.S.S.R., Mikoyan, was reported to have urged an increase in the price of gold, arguing that the present price was an “artificially established” one, and that “the difference between this price and the one that should exist amounted to tribute paid by the countries that sell gold to the United States.”24
If the U.S.S.R. were actively interested in forcing the United States to increase the price of gold, it should withhold gold rather than sell it. If U.S.S.R. policy were motivated by the argument sometimes put forward that the inadequate supply and production of gold outside the communist bloc are retarding economic expansion, it would also follow the policy of selling as little gold as possible. In these circumstances, withholding gold would be economic warfare on a grand scale. Increased gold sales would, on the contrary, strengthen the financial system of the non-Soviet world and make it easier to maintain the price of gold at $35 an ounce.
Stocks
Estimates of the gold holdings of the U.S.S.R. vary greatly. A number of estimates are in the neighborhood of $8 billion; one or two estimates are considerably higher; while yet others set holdings at only a fraction of this amount.25 Their size has not been reported by the U.S.S.R. since the 1930’s.26 Estimates of current gold reserves are based on data for production and sales, and are naturally subject to wide errors. Nevertheless, the gold holdings of the U.S.S.R. must be substantial. These would include the gold received from Spain during the Spanish Civil War and the excess of production over sales for about 30 years. Stalin reportedly attached great importance to gold production and reserves.27 These reports are consistent with the large expansion of output in the 1930’s—at great cost in human lives and suffering—and with the fact that production of gold was continued and even expanded during World War II. There appears to be considerable attention to gold production under the Khrushchev regime.
On a number of recent occasions, the U.S.S.R. has linked the idea of expansion of trade with the rest of the world to the grant of substantial lines of credit. For example, this point is reported to have been raised by Macmillan and Khrushchev in their discussions in the spring of 1959 on increasing trade between Great Britain and the U.S.S.R., with the former reportedly saying that he would be glad to accept gold in payment for goods, and the latter replying that the U.S.S.R. did not have any gold. Khrushchev’s denial is, of course, to be interpreted figuratively. The U.S.S.R. has a substantial quantity of gold, even if it is probably much less than the large amounts often mentioned. Khrushchev’s denial certainly does not mean that the Soviet gold holdings are small. His views on the role of gold—and his reasons for shifting attention away from gold—were implied during a press interview in 1958:
Question: We understand, Mr. Khrushchev, that your policy consists in balancing export and import so as to get by without the purchase and sale of gold.
N. S. Khrushchev: You won’t get very far on gold reserves alone, there is always a limit to them, whereas the development of the economic potential and the production of commodities is the capability of the nation, the capability of the people, and all this is always richer than gold reserves. Economic relations between countries should be developed mainly on the basis of exchange of commodities, in other words, on the basis of purchase and sale. We do not deny that gold does play its part in trade and we are not advocates of sitting on sacks of gold.28
These views, which were not further elaborated, are, of course, not novel or surprising. The U.S.S.R. knows that part, if not all, of its gold production will have to be exported to pay for imports; it wishes to increase its exports of certain types of goods but it would like to increase its imports even more; and it would prefer to pay for some of these additional imports with credits, which would ease the strain of exporting. The U.S.S.R. may also be of the opinion that it might receive easier economic, and less suspicious political, treatment if it simultaneously increased its imports and became a debtor on a substantial scale.
These considerations do not, however, explain why the U.S.S.R. has gone to such pains to accumulate what must be considered, by any standard, as large gold reserves. The answer to this question is probably to be found from an examination of the three following considerations.
First, the U.S.S.R. has accumulated gold both to meet fluctuations in its balance of payments and to serve as a “war chest.” Such accumulation is not unusual for any country; indeed, given the inability of the U.S.S.R. to obtain credits on a significant scale, it has been indispensable. After the Revolution, the Soviets had periods when they had little to export except gold—and on several occasions they found it difficult to export that.29 Since those days, the U.S.S.R. has had balance of payments deficits, some of which were obviously unplanned, and it is clear that state planning is no guarantee against future deficits. Time and again the U.S.S.R. has encountered difficulties, and adverse political reactions, in trying to expand exports of one commodity or another to finance such deficits. Gold is practically the only exception to this experience. Lenin’s essay in 1921, The Importance of Gold Now and After the Complete Victory of Socialism, is often quoted to the effect that gold is useless—“when we conquer on a world scale I think we shall use gold for the purpose of building public lavatories in the streets of several of the large cities of the world. This would be the most ‘just’ and educational way of utilizing gold.” But if Lenin considered gold useless in the socialist future, he considered it necessary in the capitalist present. As he explained it:
However “just,” useful, or humane it would be to utilize gold for this purpose, we nevertheless say: Let us work for another decade or so with the same intensity and with the same success as we have been working in 1917–21, only on a wider field, in order to reach the stage when we can put gold to this use. Meanwhile, we must save the gold in the R.S.F.S.R., sell it at the highest price, buy goods with it at the lowest price. “When living among wolves, howl like the wolves.”30
Secondly, the U.S.S.R. has produced gold as a by-product of other things. The term by-product is used here not in a technical sense (i.e., a by-product of copper or other metals) but rather in a political and social sense. The Soviet system in the 1930’s produced hundreds of thousands of persons who had to be punished, removed from European Russia, and put to work at jobs that required only the simplest tools. Pick and shovel brigades in the remotest recesses of Siberia met these requirements; and when these brigades worked on the extremely rich placer deposits of Kolyma, they produced large amounts of gold. Later, prisoners of war and political prisoners from nations that were overrun provided additional labor on a large scale. As these sources of cheap labor dried up after the war, the labor force fell and mechanization and rationalization became indispensable if production was to be maintained and expanded. But before they became indispensable, some 20 years had been gained, billions of dollars of gold had been produced, and the settlement of remote areas had been facilitated.
It may be that “with the virtual end of forced labor, bearing in mind the remote Arctic location of Soviet gold mines, it seems uneconomic to mine gold for sale abroad at $35 an ounce. It would make better sense to sell other things, including tin and aluminum.”31 On the other hand, it may be argued that the high cost and the comparative disadvantage of gold production have not been proved conclusively; that the stable market for gold compensates in part for its comparatively low price; and that the price of gold may be increased.
Thirdly, the U.S.S.R. attaches great importance to gold for internal purposes. To quote from a recent Soviet textbook, Political Economy:32
Of course only a monetary commodity which itself has value can have the function of a measure of value—such as gold. In the Soviet Union and the other countries of the socialist camp gold plays the part of universal equivalent. Soviet currency has a gold content, being tokens of gold.
In socialist society money can only fulfill the functions of a measure of the value of commodities by virtue of its connection with gold … Soviet money retains the historically derived connection with gold.
This statement is, of course, almost identical with that of Marx: “Only insofar as paper-money represents gold, which like all other commodities has value, is it a symbol of value.”33
The attitude of the U.S.S.R. toward a gold-connected money, whatever this may mean in respect to the Soviet money supply, is firmly rooted in Marxian doctrine. It has been suggested (not without a certain wry humor) that the Soviet attitude toward gold is actually more Victorian than the attitude of the West.
The previous discussion has made it clear that any estimate of Soviet gold holdings is subject to very wide error. Nevertheless, an estimate of the probable range of these holdings may have some limited usefulness. Gold holdings were last reported as $840 million in 1935. In the period 1936–59, these holdings were increased by the gold obtained from Spain during the Civil War, amounting to more than $500 million, and by production, estimated at from somewhat less than $5 billion to somewhat more than $7 billion; and they were reduced by sales amounting to at least $2 billion. The combination of these estimates would suggest that Soviet gold holdings at the end of 1959 were in the range of $4.0–6.5 billion.
Ruble deposit balances
The establishment of a convertible ruble would imply a belief that foreigners were willing to hold deposit balances in rubles, in part because they were willing to conduct some of their international trade in rubles. The ruble would not be made convertible into gold if it were expected that rubles would in fact be converted, for this would be equivalent to selling gold. The expectation must be that as a general rule the rubles would not be converted.
Ruble balances could be created if the U.S.S.R. ran a balance of payments deficit and its creditors accepted payment in ruble deposits. The U.S.S.R. might secure genuine advantages if it could persuade foreigners to build up such deposit balances. It would obtain foreign goods by a process equivalent to borrowing at short term, with the prospect of paying little interest on the amount borrowed. It could thus increase its imports without increasing its exports, or, alternatively, reduce or eliminate its sales of gold while maintaining its exports unchanged.
Foreigners could perhaps be persuaded to hold ruble balances willingly for essentially the same reasons as they now hold dollar or sterling balances. They could build up working balances which would be drawn upon when receipts from exports did not exactly match payments required for imports, and use these balances either to pay for future imports or to buy other currencies. Conceivably, these balances could be set up under interest-earning arrangements. Nevertheless, for reasons discussed below, it is unlikely that in the near future these considerations would be effective in relation to ruble balances.
Certain countries already have one important immediate incentive to hold ruble balances arising from the balance of trade. The U.S.S.R. has a substantial volume of trade. It offers the ever present attraction that it may greatly increase this volume, and the ever present threat that it can sharply redirect it. Soviet trading is highly centralized on a state basis and hence is conceived largely in bilateral terms. The U.S.S.R. will not necessarily import from all the sources of supply with which it can do business at the same price, nor will it always export to all countries at the same price. A recent study showed substantial differences between the prices paid by or to other Soviet bloc countries and those paid by or to other European countries; furthermore, there are large differences among the countries in each group.36 The terms of trade in any particular situation may be made so favorable that a country may be induced to hold “swing balances” in rubles as part of the quid pro quo. On several occasions the U.S.S.R., in accordance with a bilateral arrangement, has paid more than the world price. In such transactions the U.S.S.R. usually exports after it imports, so that the partner country would hold a ruble deposit balance until the transaction had been completed. Balances may also arise when the U.S.S.R. agrees to export capital goods, which may have a long delivery term, and to accept in payment consumer goods which can be delivered immediately.37
Short-term capital movements in the form of gold, dollars, and other convertible currencies could create ruble balances. Deposits denominated in gold rubles could be attracted by competitive rates of interest and strong security against devaluation. If these deposits were set up with gold, the U.S.S.R. could sell the gold deposited with it, invest the proceeds in world money markets, cover its gold obligations with its substantial gold reserves and its future gold production, and make a profit into the bargain.38 On the other hand, if the U.S.S.R. were to spend the foreign currency equivalent of its ruble deposits rather than to invest in money market securities, it would in effect be the recipient of a short-term loan at a rate of interest that consisted of the rate it paid its depositors plus its own handling costs. The development of a short-term money market in Moscow would certainly depend upon simultaneous far-reaching changes in the trading relations between the U.S.S.R. and the rest of the world. At present, such changes seem to be quite out of the question. Nevertheless, although these operations may sound fantastic now, they are by no means impossible at some future time.
Convertibility of ruble into other currencies and goods
The currencies that play an important role in international finance are convertible not only into other currencies but also into goods. It is precisely for this reason that these currencies are readily accepted in other countries. For the U.S.S.R., however, goods convertibility would be much more difficult to achieve than currency convertibility.
The ruble would be externally convertible if it could be used without restriction to buy other currencies. It could be convertible at some predetermined rate, or within predetermined margins on either side of a parity rate. It could be convertible even if there were no parity, as the fluctuating rate of the Canadian dollar testifies. But if wide use is to be made of a currency which has no parity and an indeterminate spread, there must be some assurance that the rate will not be officially manipulated. Fluctuations determined by market forces are to some extent predictable—or at least, persons operate in such markets on the idea that they are predictable.
For many years the ruble has been formally equal to 0.222168 gram of fine gold, and there is little doubt that a convertible ruble would continue to have a stated parity in terms of a quantity of gold. Though circulation is restricted to the U.S.S.R., the ruble is, nevertheless, traded on a number of black markets at a very large discount from its official dollar parity and at a substantial discount from the rate extended to tourists.
It is unlikely that any substantial volume of capital funds would move to the U.S.S.R. unless there were some guarantee of the rate at which these funds might be repatriated. If the Soviet authorities were prepared to maintain a dollar-ruble rate at par, funds could flow into or out of ruble balances solely on the basis of interest differentials plus costs. On the other hand, if the exchange rate fluctuated between predetermined margins, the interest differentials required to attract and retain funds would be larger. This might imply the development of forward quotations for dollars in terms of rubles.
The U.S.S.R. could easily make the ruble externally convertible in view of its control over the balance of payments and internal prices. The floating supply of rubles in the hands of foreigners could be controlled by bilateral trading deals, and the ruble could be made formally convertible because, in fact, no one would have rubles to convert.
As stated above, the establishment of goods convertibility for the ruble is much more problematical.39 Here the question is what goods a foreigner may buy with rubles, and what prices, terms, and conditions may be applicable to such purchases.
In free economies—such as the United States and the countries of Western Europe—an effort is made to give purchasers the maximum freedom of choice and to facilitate a high degree of competition to make this freedom effective. When there is already a high standard of living, and a fairly flexible economy, there are large reservoirs of capacity and investment to meet any new demands within a reasonable period of time. Subject to some limitations applicable to goods having strategic or defense importance, citizens and residents with domestic money can use this money to buy anything they wish. Even more important in this connection, all the interested foreigners also can buy the same goods and at the same prices. When there are limitations, most of them apply to citizens and foreigners alike.
The conditions in the U.S.S.R. are very different. The U.S.S.R. economy has expanded rapidly in the face of considerable shortages, and it is always pushing hard against capacity in one important field or another. Over very long periods, it has employed rationing, differential pricing, “expediting,” and the principle of first come, first served to allocate short supplies. There are many commodities which a Russian holding rubles cannot buy at any price. There are even more which a foreigner cannot buy at all, let alone buy at a reasonable price or within a reasonable delivery period. Given the number of tight spots and bottlenecks in the Soviet economy, there are many commodities which cannot be exported in any substantial volume without threatening the disruption of centralized production plans. Failure on the part of a Soviet citizen to produce an assigned quantum of goods may be severely punished (and has not infrequently been considered sabotage), and any proposal to permit free foreign purchases of scarce goods would be much the same as a request to authorize economic warfare.
There is thus a very great difference between what Soviet goods a foreign holder of rubles can buy and what, for example, U.S. goods a foreign holder of dollars can buy. A holder of rubles can buy only what the Soviet Government wishes to sell; a holder of dollars can buy anything at the prevailing price. Since it is anticipated that Soviet bilateral deals will balance, a country left with a ruble credit at the end of a deal may be in a worse position for the next deal than if it had come out even.40 The reason is that, with respect to any trading negotiations, the U.S.S.R. prefers to have payment for its exports in imports rather than in balances of its own currency.
There are three principal reasons why the ruble is unlikely to be made freely convertible into goods in the near future. First, many goods are not generally available either for domestic purchase or for export. Second, Soviet prices reflect not only differential commodity tax burdens, but also a structure of costs that differs widely from that of other major countries. As a result, there is great dissimilarity between the structure of Soviet prices and that of world prices. Specifically, consumer goods are much more expensive relative to capital goods in the U.S.S.R. than in Europe and the United States. The relationship of the price of one good to the price of another may function more or less satisfactorily for internal pricing41 without indicating the relationship at which the U.S.S.R. will trade one or the other to foreigners. Relative prices reflect all the singularities of Soviet policy with respect to social and political objectives, costing, and pricing.42 Third, external prices are affected by an additional distorting element, the overvaluation of the ruble.43 The present exchange rate of four rubles to the dollar is not realistic, but this fact is not important to the U.S.S.R. The exchange rate does not have to convert domestic ruble prices into realistic world prices, since it is not designed to move exports or to equilibrate foreign receipts and payments in terms of a price mechanism. If the U.S.S.R. wishes to export goods, it is not bothered by calculations of the domestic price converted at parity—it simply sells on the basis of the world price. The extent to which it shades the world price depends upon the stability of that price and how anxious the U.S.S.R. is to sell quickly.
When the U.S.S.R. wishes to sell, the world price is controlling. When the U.S.S.R. does not wish to sell, a foreign buyer would not be able to buy at any price or, to the same effect, he might be quoted an impossible export price based on the domestic price converted at the official rate of exchange.
A speech by K. V. Ostrovityanov to the 21st Congress44 described parts of the above situation in the following words:
The growth of international socialist division of labor and economic connections between socialist countries inevitably will call forth growth and development of monetary exchange. On the other hand, monetary-exchange relations will develop into interrelations between countries belonging to the two different systems—socialism and capitalism… .
The development of monetary-exchange relations in the economic interrelations between countries of the socialist camp will call for, of necessity, a single standard for the comparison of costs of production in a given country with costs in other countries of the world system of socialism and also for comparison of competitive totals of the two systems—socialism and capitalism… .
At the present time the countries of the socialist camp are concluding trade agreements between one another based on world prices which have been corrected suitably45 in order to give them great stability… .
The goods convertibility of the ruble is and will continue to be severely limited. This is clearly the situation between the U.S.S.R. and the countries outside the Soviet bloc. It is also, but less clearly, the situation within the bloc, where trade is essentially on a barter basis. The bloc countries several years ago instituted a so-called system of multilateral clearings to obtain some of the advantages of convertibility. This system was expanded in late 1959 to provide interconvertibility of bloc currencies, though the terms and conditions of this inter-convertibility were not announced.46 The effectiveness of any such agreements would continue to depend upon whether, with the funds obtained through conversion, a member of the bloc could obtain from another member, on fair terms, the goods it wanted. It is unlikely that any agreements on convertibility could assure this. The bloc might set up arrangements that formally looked like the European Payments Union, or some system of convertibility on a regional basis, which, however, functioned quite differently. Monetary refinements by themselves do not eliminate the barter character of U.S.S.R. trade that the combination of state trading, shortages of goods, and distortions of internal prices and exchange rates makes inevitable. Nor does the introduction of a third country into a two-sided barter transaction eliminate the barter element. Thus, when Burma earned a ruble balance with the U.S.S.R. by selling rice, and wanted to buy goods in Czechoslovakia with this balance, it engaged in three-cornered negotiations to bring the deal off. The same sort of problem would arise if, for example, Poland wished to spend ruble balances in Czechoslovakia.
In short, the U.S.S.R. could easily make the ruble technically convertible into other currencies within the Soviet bloc, or in a considerably wider area. The strict controls that are exercised over imports, exports, and the balance of payments guarantee, however, that such convertibility would impose no significant changes on the U.S.S.R. On the other hand, it would have no real economic advantages, though the establishment of convertibility in this sense might be good propaganda.
If the U.S.S.R. became a center for short-term capital movements by accepting ruble deposits denominated in gold, and if it paid interest on these deposits, it could enter the banking business in competition with other centers, scoring certain economic and propaganda advantages. But any possibility that the U.S.S.R. can, in any meaningful sense, make the ruble convertible into goods, either at the present time or for years to come, is very remote. This deficiency would severely limit any use that other countries might make of the ruble, even if it were made technically convertible. It has been recognized in the U.S.S.R. itself that the ruble can become an international currency only when it is responsible for a much larger share of the world’s production and international trade, and when prices in the communist countries are made more competitive than they now are with those in capitalist countries.47 The realization of these objectives requires not only the adjustment or rationalization of relative prices in the U.S.S.R. but also the adoption of a realistic exchange rate. | ||||
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Origins and history
The origins of the rouble date back to 1704, when Peter the Great standardised this coin to 28 grams of silver. On 17th December 1885 a new standard that did not change the silver rouble but reduced the gold content to 1161 grams was adopted.
Later on, during the reign of Nicholas I, the silver rouble was declared as monetary unit and main instrument of payment. Banknotes, on the other hand, were to become a supporting instrument of payment.
Despite the reforms, innovations and trials undergone by the rouble, the currency did not lose value until the Russian Revolution in 1917.
During the dissolution of the Soviet Union in 1991, the Russian currency experienced a modification in its design. At this time, the Central Bank of the Soviet Union (Gosbank) put in circulation new banknotes and coins, which were also issued by the Russian Bank in 1992. That very same year, the Bank of Russia issued its first series of Russian rouble banknotes with a nominal value of 5,000 and 10,000 roubles.
In 1993 there was a new reform that, along with the new banknotes issued, would put a stop to the circulation of soviet models.
In March 2014 the Russian rouble was introduced into the Republic of Crimea and the federal city of Sevastopol, after their annexation to the Russian Federation.
Current Russian rouble banknotes and coins
Today, banknotes in denominations of 5, 10, 50, 100, 500, 1000 and 5000 Russian roubles are in circulation.
Regarding coins, denominations of 1, 5, 10 and 50 kopeks, and 1, 2, 5 and 10 roubles are in use. | ||||
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] | null | [] | null | Russian roubles. | en | /themes/rusmania/favicon.ico | https://rusmania.com/practicalities/money | The official currency of the Russian Federation is the Russian rouble (Российский рубль). One rouble is made up of 100 kopecks.
►Practicalities ►Russian Money
The rouble as unit of currency has been used in Russia since the 13th century. One theory of the origin of the word rouble is that it is derived from the Russian word for 'to chop' ('rubit') as originally a rouble was a slither chopped of a piece of silver. It is theorised that kopeck is the diminutive form of the Russian word for a 'spear' ('kopyo') as the first kopeck coins contained the image of a spear.
The official symbol for the Russian rouble was only adopted in December 2013 and depicts a 'P' (a Russian 'R') with a horizontal cross. Usually you will see prices written as "100 руб." or sometimes just "100 р". The official ISO code for the rouble is 'RUB'.
Exchange rates
1 US Dollar ~ 61 Russian Roubles
1 UK Pound ~ 80 Russian Roubles
1 Euro ~ 70 Russian Roubles
RUB 5 BANKNOTE
Even though the RUB 5 banknote is still legal tender, there are practically none left in circulation so you won't be finding one in your change. The surviving ones are all in collections or kept as souvenirs. The note is green in colour and features the city of Novgorod Veliky. On the front it depicts the Millennium of Russia Monument Bell and St Sophia's Cathedral and on the back it depicts the Novgorod Kremlin.
RUB 10 BANKNOTE
Since the introduction of the RUB 10 coin, the RUB 10 banknote is also becoming rarer but you will still probably see one on your trip. They are dark-green and brown in colour and feature the city of Krasnoyarsk. The front shows the bridge over the River Yenisey and St Paraskevi Pyatnitsa's Chapel. The back has an image of the Krasnoyarsk Hydroelectric Dam. A slang term for RUB 10 is a 'desyatka'.
RUB 50 BANKNOTE
The light-blue RUB 50 banknote features St Petersburg. On its front it has an image of the monument of the personification of the River Neva (note the statue has six toes!) and the Ss Peter and Paul's Fortress can be seen in the background. The back of the note depicts the strelka of Vasilievsky Island. In common slang RUB 50 is sometimes called a 'poltinnik'.
RUB 100 BANKNOTE
The RUB 100 banknote is beige in colour and features Moscow. On the front is a depiction of the statue of the man and chariot which stands on top of the Bolshoi Theatre. The back has an image of the whole of the Bolshoi Theatre. The term 'sotka' is slang for RUB 100.
RUB 200 BANKNOTE
The new RUB 200 note is green and features the Crimean city of Sevastopol; the Monument to the Sunken Ships on the front and Khersones on the back. The choice of Sevastopol is of course rather controversial for countries who do not recognise Crimea as part of the Russian Federation.
RUB 500 BANKNOTE
The pink and purple RUB 500 note has images of both Arkhangelsk and the Solovetsky Islands. The front has a picture of the Peter the Great Monument and the River Port in Arkhangelsk, while the back depicts the Solovetsky Spaso-Preobrazhensky Monastery in the Solovetsky Islands.
RUB 1000 BANKNOTE
The RUB 1000 banknote is turquoise and slightly longer than the other notes. It contains images of the city of Yaroslavl. The Yaroslav the Wise Monument and the Our Lady of Kazan Chapel are on the front of the note. The other side depicts the beautiful Beheading of St John the Baptist Church in Tolchkov. A slang term for RUB 1000 is a 'shtuka' which literally means a 'thing'.
RUB 2000 BANKNOTE
The RUB 2,000 note. It is dark blue in colour and its front is decorated with an image of Vladivostok's Russky Bridge, while Vostochny Cosmodrome in the Amur Region is on the back.
RUB 5000 BANKNOTE
The RUB 5000 banknote was introduced in 2006 and became one of the most valuable notes in the world worth approximately EUR 120 or USD 150. It too is slightly bigger than the smaller-value notes. The Siberian city of Khabarovsk is depicted on the note. The front has images of the Nikolai Muraviev-Amursky Monument and the back depicts the bridge over the River Amur.
KOPECKS
There are currently four coins worth less than a rouble. These are the 1 and 5 kopeck coins which are made out of steal and cupronickel and the 10 and 50 kopeck coins which are now made out of tompac-plated steel, although they were previously made out of brass before 2006.
1 and 5 kopeck coins are becoming rarer as shops are more frequently rounding amounts up or down. None of these coins can actually buy you anything, and it is not unusual to see them discarded at the checkout if they are given as change. Most people also have jars of these coins at home. On the front of the coin the number of kopecks is written in figures and the back depicts an image of St George slaying the dragon.
RUB 1-5 COINS
Also in circulation are coins worth RUB 1, RUB, 2 and RUB 5 which are now all made out of nickel-plated steel. The front of the coin states the value in figures and the back has an image of the Russian double-headed eagle. The coins increase in size according to the value: the RUB 1 coin is 20.5mm in diameter, the RUB 2 is 23mm and the RUB 5 is 25mm. In addition to the standard RUB 2 some special RUB 2 commemorative coins also exist, although most of these have since been taken out of circulation by collectors. Special coins include a series of coins dedicated to the 12 Hero Cities of the Soviet Union and coins featuring Yuri Gagarin.
RUB 10 COINS
In 2010 a new RUB 10 coin was introduced into circulation. The coin is made out of brass-plated steel and is 22mm in diameter. On the front it says 10 roubles in Russian and on the back is the Russian double-headed eagle. There is also a series of special commemorative RUB 10 coins, which depict coat of arms of cities of military glory.
In addition to the new style RUB 10 coins, there is also another RUB 10 coin which you might still see in circulation although most of these have since ended up in collections. The coins are 27mm in diameter and are made out of cupronickel with a brass ring around the edge. These coins are all commemorative and there are several themes, including federal subjects and ancient cities of Russia. | |||||
9245 | dbpedia | 3 | 27 | https://fortune.com/europe/2023/10/03/russia-rouble-currency-all-time-low-interest-rate-hikes-ukraine-war-vladimir-putin/ | en | Russian rouble briefly returns to ‘laughing stock’ level that prompted emergency interest rate hikes last time | [
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""
] | null | [
"Prarthana Prakash",
"Ryan Hogg",
"Chris Morris",
"Orianna Rosa Royle",
"Phil Wahba",
"Greg McKenna"
] | 2023-10-03T00:00:00 | The Russian rouble has faced volatility since the Ukraine war kicked off—now there's inflation, shrinking current account surplus and more to worry about. | en | /icons/favicons/favicon.ico | Fortune Europe | https://fortune.com/europe/2023/10/03/russia-rouble-currency-all-time-low-interest-rate-hikes-ukraine-war-vladimir-putin/ | A déjà vu moment played out on a recent Tuesday, with the rouble teetering just below the 100-mark against the U.S. dollar—a critical benchmark for Russia’s currency. Although the rouble managed a modest comeback, this embarrassing stumble highlighted its shaky footing and raised concerns of further depreciation.
The rouble’s value has taken a beating this year, shedding almost 30% of its worth against the greenback since January.
A number of things may have influenced the drop in exchange rates—from foreign currency outflows and declining trade activity to Russia’s waning current account surplus.
But some factors may still be working to Russia’s advantage, such as its budget.
The falling value of the rouble means more of the Russian currency for every dollar earned through the trade of oil or other products. This, in turn, has given the Kremlin more money to pour into the military or social schemes, for instance, to help offset the impact of sanctions.
Despite the seeming upside of a weak ruble and the Kremlin’s swift actions to stem any negative effects from it, the Russian currency’s value is not out of the woods yet.
The August slump
When the rouble weakened to more than 100 to the U.S. dollar in August, the Bank of Russia called an “extraordinary meeting”, subsequently hiking interest rates by 350 basis points to 12%. The bank also said it would halt foreign currency purchases on the domestic market until the end of the year in an effort to stabilize its financial markets.
Russia’s state media and senior officials were also rattled by the rouble’s tumble into three-digit territory. Vladimir Solovyov, a popular TV person in Russia and President Vladimir Putin’s ally, said the country had become a laughing stock, pointing to how dire the situation had gotten.
Putin’s economic advisor, Maxim Oreshkin, told state-owned news outlet TASS that “loose monetary policy” was causing the drop in the rouble’s exchange rate and exacerbating inflation.
“A weak ruble complicates the structural restructuring of the economy and negatively affects the real incomes of the population. A strong ruble is in the interests of the Russian economy,” Oreshkin said according to the translation of an August op-ed in TASS.
In September, the central bank once against raised rates to 13% to tackle the falling rouble value and stubborn inflation, which was at 5.33% at the time. Further rate hikes are expected in the next central bank meeting later this month.
The rouble has wavered a lot since 2022—shortly after Russia’s invasion of Ukraine it hit an all-time low of 120 roubles to the U.S. dollar, but by last June, the currency had recovered to nearly 50 roubles to the dollar when oil and gas prices soared.
“This level (100) is not a technical resistance, it’s an important psychological barrier,” said Russian investment group Alor Broker’s Alexei Antonov told Reuters. “For now, everything speaks in favour of the rouble continuing to get cheaper.”
The rouble’s current weakness could be temporary, but the Russian government faces pressures on its finances and more prolonged effects of a weaker currency. Plunging export volumes continue to weigh on the economy, as the current account surplus shrank 86% year-on-year to just $25.6 billion in January-August. Elevated consumer prices along with a depreciated rouble make it harder for the average Russian to afford basic goods.
As Moscow struggles to keep its currency strong while navigating other macroeconomic challenges, experts suggest that a drop in the rouble’s exchange rate is not quite an economic crisis, although it does ring alarm bells for the government. | ||||
9245 | dbpedia | 0 | 72 | https://research.hktdc.com/en/article/NDk1Mzk0Mzc5 | en | HKTDC Research | [] | [] | [] | [
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9245 | dbpedia | 1 | 45 | https://www.forbes.com/sites/roberthart/2023/08/14/russian-ruble-tumbles-past-100-against-dollar-heres-why-thats-significant/ | en | Russian Ruble Tumbles Past 100 Against Dollar—Here’s Why That’s Significant | [
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"Russian Ruble Tumbles Past 100 Against Dollar",
"ruble",
"russia",
"ukraine",
"currency",
"us dollar",
"exchange rate"
] | null | [
"Robert Hart"
] | 2023-08-14T00:00:00 | It marks the first time the Russian ruble has fallen below the threshold since it recovered from an all time low just after Moscow launched its invasion of Ukraine. | en | Forbes | https://www.forbes.com/sites/roberthart/2023/08/14/russian-ruble-tumbles-past-100-against-dollar-heres-why-thats-significant/ | Topline
Russia’s ruble slipped past 100 per U.S. dollar on Monday morning, a nearly 17-month low that has sparked internal discord over monetary policy as economic pressures from its ongoing war in Ukraine mount and international sanctions erode Moscow’s income streams.
Key Facts
Contra
Oreshkin’s finger pointing at the central bank is a rare sign of public discord among Moscow’s governing institutions since the invasion of Ukraine began. The central bank, which hiked interest rates at a sharper rate than anticipated in July and stopped purchases of foreign currency for the rest of the year last week to shore up the ruble, offers a different explanation for the ruble’s decline, notably the country’s deteriorating trade with foreign partners. The central bank is expected to raise rates again soon.
News Peg
The ruble has been on something of a rollercoaster since Russia launched its invasion of Ukraine. On the back of immediate reactions to the war, it fell to record lows against the dollar before recovering to the highest levels against the greenback since 2015 and becoming one of the world’s best performing currencies. International trade conditions have been a key driver of the ruble’s value, particularly for Russia’s key energy exports. Russia is a key exporter of oil and gas and Europe, previously its main buyer, has been weaning itself off and imposing sanctions like price caps, dampening prices. These prices are rising now as oil demand soars and Moscow looks to Asia—particularly China and India—to find other buyers.
Further Reading | |||||
9245 | dbpedia | 2 | 10 | https://www.britannica.com/topic/chervonets | en | Chervonets | Soviet currency | [
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] | null | [] | null | Other articles where chervonets is discussed: Soviet Union: The communist regime in crisis: 1920–21: A new currency, called chervonets, based on gold, replaced the worthless ruble. Thus was inaugurated the New Economic Policy (NEP), which Lenin expected to last for an indeterminate period; during this time the country would recover from the calamities of War Communism and the population would acquire a higher… | en | /favicon.png | Encyclopedia Britannica | https://www.britannica.com/topic/chervonets | In Soviet Union: The communist regime in crisis: 1920–21
A new currency, called chervonets, based on gold, replaced the worthless ruble. Thus was inaugurated the New Economic Policy (NEP), which Lenin expected to last for an indeterminate period; during this time the country would recover from the calamities of War Communism and the population would acquire a higher…
Read More
In ruble
The chervonets was introduced as the standard unit and the basis of the state bank’s note issue; the chervonets ruble, corresponding to one-tenth of a chervonets, was made a unit of reckoning. The ruble remained a term of denomination for treasury notes and silver coins. In…
Read More | ||||
9245 | dbpedia | 1 | 12 | https://history.princeton.edu/about/publications/ruble-political-history | en | The Ruble: A Political History | [
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] | null | [] | 2023-06-27T12:00:00+00:00 | en | /profiles/ps/themes/ps_tiger/favicon.ico | Department of History | https://history.princeton.edu/about/publications/ruble-political-history | A groundbreaking history of Russia, from empire to the Soviet era, viewed through the lens of its money.
Money seems passive, a silent witness to the deeds and misdeeds of its holders, but through its history intimate dramas and grand historical processes can be told. So argues this sweeping narrative of the ruble's story from the time of Catherine the Great to Lenin.
The Russian ruble did not enjoy a particularly reputable place among European currencies. Across two hundred years, long periods of financial turmoil were followed by energetic and pragmatic reforms that invariably ended with another collapse. Why did a country with an industrializing economy, solid private property rights, and (until 1918) a near perfect reputation as a rock-solid repayer of its debts stick for such a prolonged period with an inconvertible currency? Why did the Russian gold standard differ from the European model? In answering these questions, Ekaterina Pravilova argues that politics and culture must be considered alongside economic factors. The history of the Russian ruble offers an opportunity to explore the political reasons behind the preservation of a supposedly backward financial system and to show how politicians used monetary reforms to block or enact political transformations.
The Ruble is a history of Russia written in the language of money. It shows how economists, landowners, merchants, and peasants understood, perceived, and used financial mechanisms. In her sweeping account, Pravilova interprets the well-known political events of the eighteenth to early twentieth centuries — wars, attempts at constitutional transformations, revolutions — through the ideas and politics of currency reforms and offers a new history of Russia's imperial expansion and collapse. | |||||
9245 | dbpedia | 1 | 53 | https://www.bbc.com/news/business-66496736 | en | Russian rouble falls to 16-month low against US dollar | [
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] | null | [
"Michael Race"
] | 2023-08-14T11:06:16+00:00 | The currency has been hit by rising imports and higher military spending for the Ukraine war. | en | /bbcx/apple-touch-icon.png | https://www.bbc.com/news/business-66496736 | The Russian rouble has fallen to its lowest value in 16 months, falling past 100 per US dollar.
The decline comes as pressure grows on the Russian economy, with imports rising faster than exports and military spending growing for the Ukraine war.
Russia has been targeted with sanctions by Western countries following its invasion of Ukraine in February 2022.
The rouble plummeted after war first broke out, but was bolstered by capital controls and oil and gas exports.
It has fluctuated in value since the war, but has lost about a quarter of its value overall against the dollar since Ukraine was invaded.
Earlier on Monday, the rouble was 101.04 per US dollar. The more roubles per dollar means the currency is weakening, as it will take more of it to buy one US dollar, which is typically seen as the most powerful currency in the world.
Russia's central bank has said that a key interest rate increase is possible, but maintains that it sees no threat to the country's financial stability.
When Russia invaded Ukraine the bank hiked rates from 9.5% to 20%, but began cutting them shortly afterwards.
The current rate is 8.5% and Russia's central bank will hold an emergency meeting on Tuesday to discuss a possible rate rise.
Jane Foley, managing director at Rabobank London, said the rouble had been "weakening progressively" this year, but added "the pace has picked up since late July".
"The weakness in the rouble reflects a weakening fundamental backdrop in Russia," she added, pointing out that the country's budget was in deficit and it was relying on imports from China and Turkey, but facing pressure over exports.
Russ Mould, investment director at AJ Bell, said that Russia's trade, and therefore its economy, was being hit by Western sanctions, "especially for oil and gas".
Since the outbreak of war, many EU countries which relied on Russian oil and gas have pledged to wean themselves off imports from the country and find alternative suppliers.
In December 2022, G7 and EU leaders introduced a price cap plan aimed at limiting the revenue Russia earns from its oil exports, by trying to keep it below $60 a barrel. This has played a part in the value of Russia's exports for oil dropping.
Russia also turned off the gas taps to Europe, leading to fears of blackouts. In January, Germany, once a large importer, said it no longer depended on the country's fossil fuels for its energy supply.
"Exports are down, so hard currency inflows are down, and imports are up, and even reliable trading partners such as China appear reluctant to take roubles," said Mr Mould.
He added Russia's exclusion from Swift, an international payment system used by thousands of financial institutions, had also hit Moscow.
But Mr Mould said that "rouble weakness must also be set against dollar strength", with the American currency "gaining ground against emerging currencies across the board".
He said this was partly due to the strength in the US economy, which he said "is forcing the Federal Reserve to raise interest rates in contrast to many emerging central banks, which are starting to cut (notably Brazil and Chile)". | |||||
9245 | dbpedia | 3 | 32 | https://www.wikiwand.com/en/Soviet_ruble | en | Soviet ruble | [
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""
] | null | [] | null | The ruble or rouble was the currency of the Soviet Union. It was introduced in 1922 and replaced the Imperial Russian ruble. One ruble was divided into 100 kopecks. Soviet banknotes and coins were produced by the Federal State Unitary Enterprise in Moscow and Leningrad. | en | Wikiwand | https://www.wikiwand.com/en/Soviet_ruble | The ruble or rouble ( ; Russian: рубль, romanized: rubl', IPA: [rublʲ]) was the currency of the Soviet Union. It was introduced in 1922 and replaced the Imperial Russian ruble. One ruble was divided into 100 kopecks (копейка, pl. копейки – kopeyka, kopeyki). Soviet banknotes and coins were produced by the Federal State Unitary Enterprise (or Goznak) in Moscow and Leningrad.
In addition to regular cash rubles, other types of rubles were also issued, such as several forms of convertible ruble, transferable ruble, clearing ruble, Vneshtorgbank cheque, etc.; also, several forms of virtual rubles (called "cashless ruble", безналичный рубль) were used for inter-enterprise accounting and international settlement in the Comecon zone.[5] | |||||
9245 | dbpedia | 3 | 65 | https://www.gisreportsonline.com/r/ruble-clause/ | en | Russia wants energy importers to pay in rubles – GIS Reports | [
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] | null | [
"Andrew Kureth"
] | 2022-04-12T08:00:00+02:00 | Russia wants to implement a “ruble clause” for foreign energy buyers. That could backfire, making matters even worse for the Russian economy. | en | GIS Reports | https://www.gisreportsonline.com/r/ruble-clause/ | What’s behind Russia’s ‘ruble clause’?
The Kremlin’s attempt to make “hostile countries” pay for energy imports in rubles is problematic for a host of reasons. Is there more to this move than meets the eye?
In contrast with the 2014 invasion, occupation and subsequent annexation of Crimea, the Western response to President Vladimir Putin’s military intervention in Ukraine this time has probably caught the Russian authorities by surprise: trade has been severely restricted, Western companies have come under pressure to move out of the country, Russian foreign-currency reserves held in the West have been frozen.
Not only has Russia been all but cut out of major financial systems, but the ability to use gold stocked at the Central Bank of Russia has also been limited. Certainly, this wave of sanctions is not watertight, and Moscow can still do business with a large part of the world, including China and India. Russian endurance, patriotism and propaganda will probably persuade many Russians that putting on a brave face and making sacrifices are more important than economic growth. Yet, although sanctions will not devastate the economy and cause unbearable difficulties for the population and Russia’s current leaders, they will continue to take their toll, especially in the long run.
‘Ruble clause’
Several things went wrong from the Kremlin’s perspective, and the strongest reactions came from the financial sector. As many Russians perceived that something was not going according to plan and that months of trouble were probably in sight, they snapped up all sorts of consumer goods. The run on the supermarkets and durable goods in general, fueled by the sharp increase in the supply of rubles registered in the last quarter 2021, led to soaring consumer prices.
In mid-March 2022 annual inflation neared 15 percent but was running at a weekly rate not much below 2 percent. At the same time, those who could tried to exchange their ruble-denominated cash and assets into dollars and euros. The result was a rapid depreciation of the ruble, from about 85 rubles per euro in early February to about 150 rubles per euro on March 10.
Russia blamed the West for the drop in the ruble exchange rate.
Understandably, the Russian authorities blamed the West for the drop in the ruble exchange rate, and depreciation for inflation. At the same time, they reacted by enforcing capital controls, restricting convertibility, offering more rubles to support bank liquidity and raising interest rates on ruble deposits.
Shortly afterward, they also announced that in the future Moscow would honor its euro- and dollar- denominated debts, but would ask “hostile countries” to pay for their energy imports in rubles. Some dubbed this policy the “ruble clause.”
The authorities can now boast that the ruble has stabilized. By the beginning of April, one euro bought 85 rubles, marking a slightly stronger exchange rate than before the war began. Western operators are perhaps not overly interested in Russian monetary policy. But what about the ruble clause? Is it little more than a flash in the pan with little practical relevance, or should we take it more seriously?
Domestic drivers
Requiring payments in rubles barely changes the picture on the international scene. Perhaps it is an attempt to transform the ruble into an international means of payment. If so, the move is premature, to say the least. It is more likely that the current efforts to polish the ruble’s image are prompted more by domestic issues than by an ambition to play a bigger role in the international money market.
The presence of a ruble clause for Russian energy exports means that importers must buy rubles to pay Russian exporters. Since there are currently limited amounts of rubles available on foreign currency markets, the main way of getting hold of them is to buy them from the Russian central bank at a price (the exchange rate) set by the central bank.
At the end of the day, therefore, Western “hostile” importers will still pay for their imports in dollars or euros, but their counterpart will be the central bank, rather than the exporting companies. Does that make a difference? The answer depends on the price-setting mechanism, which leads to the second comment.
×
Facts & figures
Ruble-euro exchange rate
February-early April 2022
Energy contracts have usually been denominated in dollars and euros. There is good reason for this. In a world characterized by globalized transactions, the relative price of energy, i.e., the price of energy relative to all other goods and services, depends on supply and demand. Exchange-rate manipulation does not cause much distortion.
For example, French exporters of nuclear power or Saudi oil producers can hardly alter the nature of a contract by manipulating the exchange rate of the euro or the dollar after the contract has been signed. This explains why the dollar and the euro are successful international currencies.
International currency?
But things would be different if the Russian central bank restricted full convertibility of the ruble (for example through controls on capital flows), or if the ruble exchange rate were heavily influenced by the price of a limited number of goods or commodities (like gas and oil). One can perhaps argue that buyers could eliminate the exchange rate risk by buying rubles on the forward market – that is, by agreeing today on the price at which rubles will be bought and sold in the future. In turn, the presence of a thriving market for exchange rate derivatives would encourage operators to accumulate rubles to meet speculators’ demand.
If that were to happen, the ruble would gradually acquire the role of international currency and the Russian central bank would reap the benefits of seigniorage: selling rubles at no cost (except the cost of printing). Is that realistic? Can the Russians enjoy the free ride of seigniorage by introducing a ruble clause? The answer is no. Seigniorage is not up for grabs. It is the reward for a reputation for convertibility and relative stability. The Russian central bank lacks both.
If Moscow were to try and apply such a clause, it would signal its decision to default on Russia’s dollar- and euro-denominated debts.
The picture would be different if the proposed switch to ruble-only payments applied to previously agreed dollar/euro-denominated contracts that must now be honored in rubles at an exchange rate dictated by the Russian central bank. This would clearly amount to a breach of contract. Insisting on such a change would represent a self-inflicted blow: it would undermine Russian operators as commercial counterparts and would probably damage the Russian economy more than the sanctions currently in place.
Put differently, if Moscow were to try and apply such a clause, it would signal its decision to default on Russia’s dollar- and euro-denominated debts, at least on those held by “hostile countries.”
Circumventing the sanctions
If the ultimate goal is to avoid default, the explanations for requesting ruble-denominated payments must lie somewhere else. There are two plausible answers.
One is inward-looking. The Russian authorities need significant quantities of accepted means of payment (gold, dollars and euros) to circumvent the Western financial blockade. As mentioned above, avoiding the blockade is possible (perhaps through Asian and Latin American countries), but it will not be cheap.
The ruble clause would cut out the energy companies from the payment system and help those dollars make their way to Moscow.
Hence, President Putin must ensure that all foreign currency proceeds from energy exports find their way to the Russian central bank, rather than staying parked in opaque shell companies and Western bank accounts. The ruble clause would cut out the energy companies from the payment system and help those dollars make their way to Moscow.
The second answer relates to the possible creation of a hard, commodity-based ruble, as opposed to its present fiat status (paper money). A “hard ruble” would possibly be the best way of boosting Russia’s prestige, killing inflation and meeting Russians’ expectations for a stable currency, not unlike what happened in Soviet Russia, when Lenin introduced the gold-backed “chervonets” in October 1922.
Is that a feasible project? Could oil or gas replace gold as the commodity standard? Could that pave the way for other commodity-based currencies, like the Chinese yuan?
×
Scenarios
The answer is mixed. A hard ruble would probably be a partial domestic success, but only if it were really hard – gold coins that individuals can hold and possibly hide away. Liquid rubles – certificates (paper money) backed by oil and gas – will not do because people would not trust a commitment to convert paper into gold, let alone into gas or oil. Yet, liquid rubles could be the reference for a monetary standard similar to a currency board, a corset that would prevent the central bank from pursuing discretionary monetary policy.
It is doubtful that monetary rigor is Moscow’s goal. Of course, lack of faith in convertibility would dissolve if Russia’s gold reserves were parked outside Russia. The Kremlin would never consider that option, though. The same would be true for Beijing. Indeed, one can conclude that the recent international tensions have probably killed all grand-scale projects for a golden yuan, too. | |||||
9245 | dbpedia | 0 | 30 | https://www.dema-coins.com/2023/11/ruble-coin-USSR.html | en | Ruble: coin from Union of Soviet Socialist Republics (USSR) | [
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] | [] | [] | [
""
] | null | [
"DEMA"
] | 2023-11-28T10:18:00+02:00 | 1 ruble, 1924: Union of Soviet Socialist Republics (USSR). ОДИН РУБЛЬ. ПРОЛЕТАРИИ ВСЕХ СТРАН, СОЕДИНЯЙТЕСЬ! State Emblem, Soviet Union. Silver coin. | en | https://www.dema-coins.com/favicon.ico | https://www.dema-coins.com/2023/11/ruble-coin-USSR.html | RUBLE: COIN OF SOVIET UNION
1 ruble, 1924: Union of Soviet Socialist Republics
Union of Soviet Socialist Republics (USSR) — transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, dictatorship. It was nominally a federal union of 15 national republics; in practice, both its government and its economy were highly centralized. It was a one-party state governed by the Communist Party of the Soviet Union.
ОДИН РУБЛЬ: one ruble.
ПРОЛЕТАРИИ ВСЕХ СТРАН, СОЕДИНЯЙТЕСЬ!: Workers of the world, unite! (the political slogan — one of the rallying cries from "The Communist Manifesto" by Karl Marx and Friedrich Engels; the essence of the slogan is that members of the working classes throughout the world should cooperate to defeat capitalism and achieve victory in the class conflict).
СССР: USSR.
State Emblem of the Soviet Union (Sickle and a hammer on a globe depicted in the rays of the sun and framed by ears of wheat, with the inscription "Proletarians of the world, unite!" in six languages — Russian, Ukrainian, Belarusian, Georgian, Armenian, Azerbaijani. At the top of the Emblem is a five-pointed star).
A worker and a peasant on the background of the sunrise.
The inscription on the edge of the coin: "ЧИСТОГО СЕРЕБРА 18 ГРАММ (4 3. 21 Д.) - П•Л". This means: "PURE SILVER 18 GRAMS (4 Z. 21 D. or 4 zolotnik + 21 dolya)" — zolotnik = 4.26575417 g, dolya = 44.435 mg. П•Л — "P•L" (initials of Leningrad Mint master Pyotr Latyshev).
Leningrad Mint (nowadays — Saint Petersburg, Russian Federation).
Mintage: 12.998.000.
Silver (0.900): 33 mm - 19.97 g
Reference price: 55$
COIN RUBLE — WHERE & WHEN (coins catalog: by names & emitents)
RUSSIA (17th century-...) — TSARDOM OF RUSSIA + RUSSIAN EMPIRE + RUSSIAN SFSR + SOVIET UNION + RUSSIAN FEDERATION: ruble = 100 kopeck
CENTRAL ASIA AND CAUCASIA (KHOREZM PEOPLE'S SOVIET REPUBLIC, 1920-1922): ruble
RUSSIAN SPITSBERGEN (tokens, 1993): ruble = 100 kopeck
PRIDNESTROVIAN MOLDAVIAN REPUBLIC, unrecognised breakaway state Transnistria (2014-...): ruble = 100 kopeck
RUBLE as coin name.
Ruble (or rouble) — historical and modern coin, the currency of Russia. It is divided into 100 kopeck. With a rare exception, this is a purely Russian coin.
The ruble of Russia first arose as a unit of measurement of money (accounting monetary unit) and only over time — as a coin. Rubles are first mentioned in written sources of the 13th century to indicate the whole Novgorod hryvnia or its part (1/2 or 1/4: conflicting information).
Gradually, the term began to be used, indicating a certain number of small coins. For example, 200 Moscow denga coins or 100 Novgorod coins — "Novgorodok", which over time received the name kopeck (a rider with a spear is depicted: Russian "копьё" — kop'yo).
The first ruble as a coin dates back to 1654. After its use in circulation for only one year, it was withdrawn due to the low silver content.
The coinage of rubles was restored after half a century — by the monetary reform of Peter I in 1704. From that time to the present, the ruble, divided into 100 kopecks, has been the unchanged monetary unit of Russia: first of the Russian Empire, then of the RSFSR, the USSR, and finally of the Russian Federation...
There are a significant number of versions of the origin of the name "ruble", but they all boil down to one thing — the connection with the Russian word for "to cut, to chop, to hack" (Russian "рубить" — rubit).
The most widespread and plausible is the theory about the ruble as a part ("offcut") of the ancient monetary unit of Kyivan Rus' — the hryvnia (rather, its provincial varieties, for example, the Novgorod type).
Other versions are also known, which predict the connection of the appearance of the ruble with: the rupee coin, the special production technology of the Novgorod hryvnia (a seam appeared — "rubets"), the Arabic word rub (in Arabic "ربع" — a quarter, a fourth of that still hryvnia). | |||||
9245 | dbpedia | 2 | 29 | https://www.dema-coins.com/2023/11/ruble-coin-USSR.html | en | Ruble: coin from Union of Soviet Socialist Republics (USSR) | [
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] | [] | [] | [
""
] | null | [
"DEMA"
] | 2023-11-28T10:18:00+02:00 | 1 ruble, 1924: Union of Soviet Socialist Republics (USSR). ОДИН РУБЛЬ. ПРОЛЕТАРИИ ВСЕХ СТРАН, СОЕДИНЯЙТЕСЬ! State Emblem, Soviet Union. Silver coin. | en | https://www.dema-coins.com/favicon.ico | https://www.dema-coins.com/2023/11/ruble-coin-USSR.html | RUBLE: COIN OF SOVIET UNION
1 ruble, 1924: Union of Soviet Socialist Republics
Union of Soviet Socialist Republics (USSR) — transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, dictatorship. It was nominally a federal union of 15 national republics; in practice, both its government and its economy were highly centralized. It was a one-party state governed by the Communist Party of the Soviet Union.
ОДИН РУБЛЬ: one ruble.
ПРОЛЕТАРИИ ВСЕХ СТРАН, СОЕДИНЯЙТЕСЬ!: Workers of the world, unite! (the political slogan — one of the rallying cries from "The Communist Manifesto" by Karl Marx and Friedrich Engels; the essence of the slogan is that members of the working classes throughout the world should cooperate to defeat capitalism and achieve victory in the class conflict).
СССР: USSR.
State Emblem of the Soviet Union (Sickle and a hammer on a globe depicted in the rays of the sun and framed by ears of wheat, with the inscription "Proletarians of the world, unite!" in six languages — Russian, Ukrainian, Belarusian, Georgian, Armenian, Azerbaijani. At the top of the Emblem is a five-pointed star).
A worker and a peasant on the background of the sunrise.
The inscription on the edge of the coin: "ЧИСТОГО СЕРЕБРА 18 ГРАММ (4 3. 21 Д.) - П•Л". This means: "PURE SILVER 18 GRAMS (4 Z. 21 D. or 4 zolotnik + 21 dolya)" — zolotnik = 4.26575417 g, dolya = 44.435 mg. П•Л — "P•L" (initials of Leningrad Mint master Pyotr Latyshev).
Leningrad Mint (nowadays — Saint Petersburg, Russian Federation).
Mintage: 12.998.000.
Silver (0.900): 33 mm - 19.97 g
Reference price: 55$
COIN RUBLE — WHERE & WHEN (coins catalog: by names & emitents)
RUSSIA (17th century-...) — TSARDOM OF RUSSIA + RUSSIAN EMPIRE + RUSSIAN SFSR + SOVIET UNION + RUSSIAN FEDERATION: ruble = 100 kopeck
CENTRAL ASIA AND CAUCASIA (KHOREZM PEOPLE'S SOVIET REPUBLIC, 1920-1922): ruble
RUSSIAN SPITSBERGEN (tokens, 1993): ruble = 100 kopeck
PRIDNESTROVIAN MOLDAVIAN REPUBLIC, unrecognised breakaway state Transnistria (2014-...): ruble = 100 kopeck
RUBLE as coin name.
Ruble (or rouble) — historical and modern coin, the currency of Russia. It is divided into 100 kopeck. With a rare exception, this is a purely Russian coin.
The ruble of Russia first arose as a unit of measurement of money (accounting monetary unit) and only over time — as a coin. Rubles are first mentioned in written sources of the 13th century to indicate the whole Novgorod hryvnia or its part (1/2 or 1/4: conflicting information).
Gradually, the term began to be used, indicating a certain number of small coins. For example, 200 Moscow denga coins or 100 Novgorod coins — "Novgorodok", which over time received the name kopeck (a rider with a spear is depicted: Russian "копьё" — kop'yo).
The first ruble as a coin dates back to 1654. After its use in circulation for only one year, it was withdrawn due to the low silver content.
The coinage of rubles was restored after half a century — by the monetary reform of Peter I in 1704. From that time to the present, the ruble, divided into 100 kopecks, has been the unchanged monetary unit of Russia: first of the Russian Empire, then of the RSFSR, the USSR, and finally of the Russian Federation...
There are a significant number of versions of the origin of the name "ruble", but they all boil down to one thing — the connection with the Russian word for "to cut, to chop, to hack" (Russian "рубить" — rubit).
The most widespread and plausible is the theory about the ruble as a part ("offcut") of the ancient monetary unit of Kyivan Rus' — the hryvnia (rather, its provincial varieties, for example, the Novgorod type).
Other versions are also known, which predict the connection of the appearance of the ruble with: the rupee coin, the special production technology of the Novgorod hryvnia (a seam appeared — "rubets"), the Arabic word rub (in Arabic "ربع" — a quarter, a fourth of that still hryvnia). | |||||
9245 | dbpedia | 3 | 24 | https://www.investopedia.com/terms/forex/r/rub-russian-ruble.asp | en | Russian Ruble (RUB): Overview of Russia's Currency | [
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"Lucas Downey"
] | 2008-06-30T13:00:00-04:00 | The Russian ruble (RUB) is the currency of Russia and is the second-oldest currency still in circulation, behind the British pound sterling. The Russian ruble is made up of 100 kopeks. | en | /favicon.ico | Investopedia | https://www.investopedia.com/terms/forex/r/rub-russian-ruble.asp | What Is the Russian Ruble (RUB)?
The Russian ruble (sometimes spelled rouble) is the national currency of the Russian Federation. The ruble is the second-oldest currency still in circulation, behind the British pound. It is made up of 100 kopeks.
Understanding the Russian Ruble (RUB)
The ruble (RUB) has been used since the 13th century and has been through a number of incarnations during that time, including multiple revaluations and devaluations. The most recent changes occurred before the fall of the Soviet Union in 1992 and during the redenomination in 1998. The 1998 redenomination made one new ruble worth 1000 old rubles.
In recent years, the currency's exchange rate has generally tracked global commodity prices, especially oil prices, because Russia's economy heavily depends on exports of oil, natural gas, and other natural resources. The ruble collapsed in the second half of 2014, losing about half its value versus the U.S. dollar as global oil prices plunged. Economic and financial sanctions imposed by the U.S. and European Union on Russia in July 2014 over its invasion and annexation of Crimea also helped weaken it.
The Ruble and Geopolitics
The ruble’s exchange rate is not only affected by economic factors, but also by geopolitical events and tensions involving Russia and its neighbors. In recent years, the ruble has experienced significant volatility and depreciation due to several crises and conflicts that have strained Russia’s relations with the West and other countries.
One notable event was the annexation of Crimea by Russia in 2014, which triggered international sanctions and condemnation from the United States, the European Union, and other countries. The sanctions targeted key sectors of the Russian economy, such as energy, finance, defense, and trade, and restricted access to foreign capital and technology. The ruble plunged to record lows against the dollar and the euro in late 2014 and early 2015, as investors fled Russian assets amid uncertainty and risk. Prior to this event, the USD/RUB exchange rate was around 30 rubles to the dollar; following the invasion it rose to 50-60 rubles to dollars, where it remained for several years.
Following Russia’s large-scale invasion of Ukraine in February 2022, the U.S., the EU, and other nations imposed another round of even stricter sanctions on Russia’s largest financial institutions and enterprises, including Russia’s central bank and energy giant Gazprom. At the same time, many Western corporations suspended or ceased doing business inside of Russia. These measures sent the value of the ruble plummeting to record lows against foreign currency, and briefly touching nearly 135 rubles to the dollar.
As the Russia-Ukraine conflict has raged, the ruble settled into a trading range of around 70 to 80 RUB per USD; however, it remains volatile. For instance, in June of 2023, when the private military contractor Wagner Group mutinied and briefly marched toward Moscow, the ruble sank to 87 to the dollar — its weakest level since the early days of Russia's invasion of Ukraine — as it revealed internal political tensions and fragility for Putin's regime.
Russia's Economy
Russia is more than twice as large as the contiguous 48 U.S. states and is blessed with enormous natural resources. Yet Russia’s annual gross domestic product (GDP) ranked only 11th worldwide in 2021, is only 7.72% the size of the U.S. economy. That's because Russia relies heavily on exports of natural resources, rather than higher-value-added industries. In fact, in terms of GDP, Russia trails much smaller countries, such as Italy and France.
Ongoing political tensions have hurt the Russian economy, as the country has repeatedly faced sanctions from the international community. The value of the ruble along with many Russian companies plummeted after Russia began its invasion of Ukraine in February 2022.
The Digital Ruble
President Vladimir Putin announced in 2017 that the Bank of Russia would issue a Central Bank Digital Currency (CDBC). Though many countries are now exploring CBDCs, Russia was one of the earliest countries to do so. In December 2021, a prototype of the digital ruble was completed and the first transfers using the digital ruble's platform were successful. The Bank of Russia announced that 12 Russian banks were ready to begin using the digital ruble.
In February 2022, many commentators suggested Russia could evade international sanctions using cryptocurrency. Though a CBDC is much different from a private cryptocurrency, a digital ruble could limit Russia's dependence on using foreign currencies, such as the U.S. dollar.
The Bottom Line
The Russian Ruble (RUB), among the oldest currencies still in circulation, is heavily influenced by global oil prices, considering Russia's key role as an exporter of oil and natural gas. The Ruble has witnessed multiple transformations since its inception in the 13th century, with the latest changes occurring due to the fall of the Soviet Union in 1992 and the redenomination in 1998. Geopolitical events, particularly Russia's conflicts with Ukraine and the sanctions imposed from various nations, have played substantial roles in devaluing the Ruble's exchange rate. Despite the tumultuous economic climate, Russia has pioneered in the digital currency space with the introduction of a Central Bank Digital Currency. The Bank of Russia maintains control over the Ruble's value through various monetary policy tools. | ||||
9245 | dbpedia | 2 | 87 | https://www.rferl.org/a/russia-plunging-ruble-crisis-confidence-policy-ukraine-war/32551217.html | en | 'Crisis Of Confidence': Ruble's Plunge Prompts Policy Clash In Russia As Costly War Drags On | [
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"Todd Prince"
] | 2023-08-16T19:20:58+00:00 | The ruble has been falling as Russia’s war on Ukraine drags on with no sign that Moscow intends to pull back. While there are underlying causes such as shrinking net exports, some experts also see a ‘crisis of confidence’ in the currency and its plunge has set off a tug-of-war over economic policy. | en | /Content/responsive/RFE/img/webApp/favicon.svg | RadioFreeEurope/RadioLiberty | https://www.rferl.org/a/russia-plunging-ruble-crisis-confidence-policy-ukraine-war/32551217.html | When Russia’s central bank surprised economists on July 21 by hiking interest rates a full percentage point, double the expected increase, it should have buoyed the ruble -- which had been on a downward trajectory since December.
Yet the Russian currency continued to tumble against the U.S. dollar the following three weeks, breaching the important psychological level of 100 on August 14 and prompting a whopping 3.5 percentage point emergency rate hike the following day, to 12 percent.
The latest slide in the ruble comes even as Russian oil, its main source of foreign currency revenue, is fetching higher prices. Higher oil prices and a stronger ruble have often gone hand in hand, but not this time: Russia’s invasion of Ukraine has warped the country’s own economy, laying land mines for the currency.
“There is a crisis of confidence in the ruble,” Sergei Aleksashenko, a former Russian central bank chief who is now a vocal Kremlin critic, said in a tweet following the August 15 rate hike. He predicted rate increases would have little impact on the currency.
The ruble’s monthslong decline comes against the backdrop of the grinding war in Ukraine, where Russia’s forces have made few gains since the first months after the full-scale invasion in February 2022 and are facing a Ukrainian counteroffensive in both the east and south.
That fierce Ukrainian resistance is forcing Russia to ramp up military spending as Western sanctions crimp energy export revenue, creating a large budget deficit that is putting pressure on the ruble exchange rate.
Meanwhile, Russian industrial and consumer demand for imported machinery, technology, and other goods has jumped, spurring demand for dollars and euros that are harder to come by.
The ruble’s weakness is putting President Vladimir Putin in a tight spot, economists say. He needs to rein in spending if he wants to tame inflation and stabilize the ruble.
But Putin has repeatedly signaled that he intends to keep the invasion going indefinitely, and the next presidential election is coming up in March – with Putin sure to win if he runs, as expected, due to the Kremlin’s control over politics and the media. Yet, he needs to shore up his image following the brief but embarrassing mutiny by the Wagner mercenary group in June and continuing setbacks in the war.
As a result, he is unlikely to curtail military or social spending in any meaningful way, thus shifting the burden of protecting the ruble to the central bank.
“There is a tug-of-war taking place in Russia right now between President Putin’s military ambitions on the one hand and the policy objectives of the central bank and finance ministry on the other,” Liam Peach, an economist at London-based research firm Capital Economics, said in an August 15 note.
That struggle was on stark display ahead of the sharp rate hike, adding to signs of tension within the ruling elite over strains on the economy and society as the war persists.
In a column published by the state news agency TASS on August 14, Putin’s economic adviser, Maksim Oreshkin, laid into the central bank without actually naming the bank or its chief, Elvira Nabiullina, writing that “the source of the weakening of the ruble and the acceleration of inflation is soft monetary policy.”
Nabiullina, who is highly respected abroad and is credited with minimizing the damage to Russia’s economy in just over a decade as central bank chief, has pointed to the decline in foreign trade as the main cause of the ruble’s weakness and has indicated that increased state spending and labor shortages resulting from the war have fueled inflation. Experts have sided with her in the debate.
Regardless, Nabiullina’s job won’t be easy. The West has frozen an estimated $300 billion in Russian central bank foreign currency reserves, shunned investment in the country, and put a price cap on its oil exports, limiting policymakers’ ability to support the ruble, Peach said.
During periods of currency weakness prior to the full-scale invasion of Ukraine and the sanctions that followed, the central bank could sell billions of dollars in foreign currency reserves to shore up the ruble -- or Western investors, believing the currency was undervalued, could snap it up.
Peach said the risks to Russia’s economic stability are materializing faster than he anticipated. He now expects the central bank to raise the rate by another 2 percentage points before the end of the year, to 14 percent.
Higher rates crimp corporate and consumer borrowing, leading to slower inflation, and make ruble deposits a more attractive investment.
“The next few months are likely to be characterized by further falls in the ruble, and much higher inflation and interest rates,” he said.
'Normal Rules Do Not Apply'
Chris Weafer, the founder of Macro-Advisory, a consulting firm focusing on the countries of the former Soviet Union, told RFE/RL that the weak ruble is not a foreboding sign of a brewing financial crisis “because it is a managed currency in a managed economy. The normal rules do not apply.”
The ruble had been a free-floating currency prior to the February 2022 invasion. The central bank has been managing it with the help of currency controls since March 2022, when the West imposed sweeping financial sanctions on the country, Weafer said.
He said the central bank and the Finance Ministry wanted to weaken ruble following its sharp rally in 2022 in order to help narrow the budget deficit. However, “they let it slip too far” and were now being instructed “from on high” to reel it back in.
The ruble reached a seven-year high of 53 to the dollar in June 2022 as surging oil and gas prices generated a foreign currency windfall just as imports collapsed due to the Western sanctions.
The Russian budget receives more ruble tax revenue from exporters when the ruble exchange rate is lower, but a sharp drop relative to other currencies also leads to an acceleration of inflation as imports become more expensive in rubles.
The Russian currency has fallen as much as 30 percent this year and by nearly half since the June 2022 peak as oil and gas export revenue plunged and imports surged.
Weafer said the August 15 rate hike was meant to send a message that “the central bank is in control and wants the ruble to recover.”
Tatiana Orlova, an economist at Oxford Economics in Britain, told RFE/RL on August 15 that the central bank may need to resort to capital controls to stabilize the ruble. She said it could force exporters to sell their foreign currency or limit the amount of foreign currency citizens can send overseas. | ||||
9245 | dbpedia | 0 | 71 | https://www.gettyimages.com/photos/soviet-ruble | en | Getty Images | [
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9245 | dbpedia | 1 | 46 | https://www.statista.com/statistics/1200710/rub-usd-exchange-rate-russia/ | en | USD/RUB exchange rate 1992-1998 | [
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Published by Statista Research Department,
Exchange rate of the U.S. dollar to the Russian ruble from July 1, 1992 to December 31, 1998
table column chart
CharacteristicExchange rate31.12.199820.6501.12.199817.8803.11.199815.8201.10.199815.9101.09.19989.3301.08.19986.2401.07.19986.202.06.19986.1701.05.19986.1301.04.19986.1103.03.19986.0703.02.19986.0301.01.19985.9602.12.19975,92101.11.19975,88701.10.19975,86102.09.19975,83201.08.19975,80001.07.19975,78203.06.19975,77401.05.19975,76401.04.19975,72901.03.19975,67901.02.19975,63201.01.19975,56003.12.19965,51301.11.19965,45601.10.19965,40203.09.19965,34501.08.19965,19702.07.19965,11901.06.19965,01801.05.19964,94003.04.19964,86301.03.19964,81802.02.19964,73605.01.19964,66101.12.19954,58001.11.19954,50404.10.19954,49001.09.19954,44702.08.19954,40505.07.19954,55302.06.19954,95805.05.19955,13005.04.19954,92001.03.19954,47301.02.19954,04806.01.19953,62302.12.19943,24902.11.19943,08505.10.19942,66802.09.19942,20403.08.19942,06001.07.19941,98901.06.19941,91606.05.19941,85401.04.19941,75302.03.19941,66802.02.19941,56007.01.19941,25901.12.19931,23103.11.19931,17901.10.19931,16901.09.1993992.504.08.199398702.07.19931,05925.06.19931,06602.06.19931,05007.05.199382902.04.199369203.03.199364903.02.199357206.01.199341702.12.199241704.11.199239602.10.199230902.09.1992210.505.08.1992161.401.07.1992125.26
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Source
Use Ask Statista Research Service
Release date
2021
More information
Region
Russia
Survey time period
July 1, 1992 to December 31, 1998
Supplementary notes
Figures were obtained at the beginning of each month.
Release date is the date of access.
Citation formats | |||||
9245 | dbpedia | 1 | 11 | https://www.npr.org/transcripts/1090312774 | en | Following the collapse of the USSR, a new Russian bartering system was born : Planet Money : NPR | [
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"Dave Blanchard"
] | 2022-04-01T19:48:15-04:00 | For a brief, strange period after the U.S.S.R. collapsed, "real" money was less valuable than tradeable objects like bricks or towels. We look back at the Russian barter economy and we see the nature of money and value underneath all currency. | Subscribe to our weekly newsletter here. | en | NPR | https://www.npr.org/2022/04/01/1090312774/when-bricks-were-rubles | SYLVIE DOUGLIS, BYLINE: This is PLANET MONEY from NPR.
KENNY MALONE, HOST:
Within just the last month, Russia became the most sanctioned nation in the world. The U.S. and Europe have now imposed thousands of individual sanctions, targeting everything from Russia's banks to its luxury goods to its vodka, even.
DAVE BLANCHARD, HOST:
But as we've talked about here before, the real economic lifeblood of Russia isn't any of that stuff. A huge chunk of Russia's economy is oil, natural gas and minerals. And countries are kind of slowly also starting to sanction that stuff.
MALONE: You know, the thing about sanctions is that they force us to look at what another country's economy really is. And, you know, I think for a lot of us, this moment was a reminder that the Russian economy is a lot less like the diversified economy of the United States and a lot more like the resource economy of a country like Saudi Arabia.
Hello, and welcome to PLANET MONEY. I'm Kenny Malone.
BLANCHARD: And I'm Dave Blanchard. This is not the first time the world has been forced to look a little closer at the realities of the Russian economy.
MALONE: Today on the show, we tell the story of the last big time that we had to look a little closer. And it revealed one of the strangest 10-year stretches in modern monetary history.
(SOUNDBITE OF MUSIC)
BLANCHARD: When the Soviet Union was at its height in the 20th century, it was this big bloc of states with a population that was bigger than U.S., had the second largest economy in the world. But it was all behind the famous Iron Curtain, and so just how exactly the USSR's economy worked was a bit of a mystery.
MALONE: And I personally find it useful to think of the USSR economy at that point in time as, like, one giant corporation that's made up of a bunch of subsidiaries that, you know, make Soviet cars or shoot cosmonauts into space or run nuclear power plants. But which parts of the economy were really generating the value and which businesses seemed successful but were really being propped up - well, that kind of stuff was tough to exactly know.
BLANCHARD: But then in the early '90s, the USSR collapsed, and the West had this opportunity to get a clearer picture of what exactly had been going on behind the Iron Curtain. One person who was sent over was Barry Ickes.
BLANCHARD: I was consulting for the World Bank at the time on a study on enterprises.
MALONE: Enterprises, as in businesses. Barry is now head of Penn State's Economics Department, but in the early '90s, he was a young professor. He'd studied the USSR, and when it started to fall, the World Bank sent Barry over to meet with all kinds of former Soviet businesses to understand how they were handling the transition from communism to capitalism.
BARRY ICKES: I went to visit one enterprise in late 1992. This was a company, an enterprise that was in the shoe sector. They produced the soles of shoes. I mean, everything was so specialized in the Soviet Union.
MALONE: Soles of shoes, maybe the upper part of shoes - Barry can't remember exactly. But shoes, a shoe factory.
BLANCHARD: So can you just describe, you know, this - when you came there, can you tell us a little bit about his office, what the office looked like?
ICKES: Well, it was a former Soviet enterprise. So all Soviet firm enterprise director's office looks the same. You know, you have, like, bulletin boards with famous employees of the enterprise. You know, there'd be, you know, a picture of Lenin somewhere because they hadn't gotten rid of it yet.
MALONE: So there's Barry, shoe factory, 1992, maybe standing under a picture of V.I. Lenin. And he starts talking to the head of the factory.
ICKES: And he pulls me to the window, and he points across the yard. And across the yard is this - like, half a city block. And this city block is just a pile of bricks. He says, that's all my savings. You know, this is what I've done, you know, because bricks - people need bricks. I can pay for it in bricks.
BLANCHARD: Way more valuable than a stack of rubles in a vault somewhere.
ICKES: Yes.
MALONE: Yes. More valuable than the ruble, the Soviet Union's currency, because when the USSR collapsed, so did its ruble, to the point that apparently bricks had become a preferable kind of money in 1992.
BLANCHARD: And this bricks as money thing, Barry says it was just one of the many strange ways the post-Soviet economy was behaving. He gave us this other example.
ICKES: There was an enterprise that produced industrial ovens that were bronze, right? And this enterprise was a gold-star enterprise. And Gorbachev went there and gave the enterprise - because it was earning hard currency. What a great, efficient Soviet enterprise.
BLANCHARD: Behind the Iron Curtain, this bronze oven company looked great. I mean, they were selling these ovens out of the USSR. They were making money.
MALONE: Yeah. It appeared that maybe one of the things the USSR was good at was making bronze industrial ovens.
ICKES: Turned out is they were exporting these things to Germany. Germany was melting the ovens down and just selling the bronze, OK? So that is an example of negative value added, right? Everything else that went into the industrial oven was worthless - right? - because the value of the bronze was worth more than the price they got for the oven.
MALONE: In other words, this little business was functionally a bronze exporter. And frankly, it could have done better just exporting the bronze and not doing a lot of work to make it into an oven. But it is an example of this disconnect between the USSR and the rest of the world and all of these strange economic distortions happening behind the Iron Curtain that people like Barry were now getting to see.
BLANCHARD: Another example, Barry says, was this Soviet company that made world-renowned optical lenses, like for medical equipment, cameras, weapons. And people thought, OK, now there's a Soviet business that's going to survive in a market economy.
MALONE: And they were good lenses, but when people got a closer look, it turned out that they were being made for way more money than anyone would pay for them in a global marketplace. And so what people like Barry were learning was that, yes, the USSR did make stuff, even high-tech stuff, but these industries were not ready to compete with companies around the world.
ICKES: We liken this to the circus mirror effect. You know, you go look at yourself in a circus mirror, and you look like Arnold Schwarzenegger, you know?
BLANCHARD: Yeah.
ICKES: That's the Soviet economy. Then you look away at a real mirror. You say, oh, my God. Look at me. I'm like this out-of-shape nebbish. That is the actual economy. That's what happened.
MALONE: What was really happening in the USSR, what the economy actually looked like was that there were these few very successful industries that we know about - natural gas, oil and mining, you know, mining for things like bronze that could go into ovens. And they were subsidizing all of the other fun, exciting tech things but that were not very successful, the nebbishy (ph) industries.
BLANCHARD: So when the Soviet Union collapses, now all of those not-successful industries are competing in a market, and they need to turn a profit. And things just kind of freeze up. If no one wants to buy your nice but ridiculously expensive camera lenses, then all of a sudden your company doesn't have a cash flow.
MALONE: And lots of formerly Soviet companies suddenly had no money and no way to pay each other, which brings us back to that shoe factory and that giant pile of bricks that Barry saw in 1992.
BLANCHARD: So where did he get the bricks?
ICKES: I think somebody couldn't pay for him in money, and he got bricks instead.
BLANCHARD: So they're doing that instead of using the ruble for some reason. Why are, you know, just everyday businesses not using the ruble at this point?
ICKES: In the early period, the difficulties is that they had no revenue. Firms had - just didn't have enough revenues.
BLANCHARD: They weren't making money. They weren't earning rubles.
ICKES: Yes. So some firms just held, you know, bricks as a store of value.
MALONE: Bricks as a store of value. This is a key idea because in addition to cash flow issues, Russian businesses were also dealing with inflation, but not just, like, regular inflation, hyper-hyperinflation at this moment.
BLANCHARD: One big reason was because in the Soviet era's planned economy, prices had been controlled. And when those price controls were lifted when the Soviet Union fell, inflation skyrocketed. In one year, in 1992, Russia's inflation was 2,500%.
MALONE: That is like if you have one ruble and you can buy a dozen eggs, then six months later, you can only afford one egg with your ruble. The ruble was becoming worthless incredibly fast.
BLANCHARD: So what this meant for a Russian business was you'd probably take bricks as payment over rubles because they were a better store of value.
MALONE: And so in the early '90s in Russia, Barry says this kind of bartering economy became surprisingly common. So, like, let's say that you are that shoe manufacturer. You need to buy some leather for your business.
ICKES: And instead of paying for the leather with rubles, you just pay with shoes. Now the leather company has the shoes, and the leather company delivers the shoes for something else. I mean, shoes wouldn't be a bad thing to have, right?
MALONE: Right. So shoes, bricks, whatever - these things had become a kind of money, which means that it's worth stepping back for just a second to talk about what money is, because money is supposed to have these three main characteristics. No. 1, it is supposed to be a store of value, something that is worth roughly the same amount day after day. Something like bricks definitely was doing better than the ruble in Russia was at that moment.
BLANCHARD: Second characteristic of money - money is supposed to be a unit of account. Like, you can assign a value. You can keep records.
MALONE: And companies apparently did figure out some bricks-to-leather-to-shoes conversions.
BLANCHARD: But money characteristic No. 3 - this is maybe the problem for bricks as money - money should provide an easy means of exchange.
MALONE: Yeah. Like, maybe companies can haul bricks around to pay each other, but nobody wants to carry a bunch of bricks for money to the grocery store to buy carrots. And in Russia, this was not a hypothetical problem.
BLANCHARD: Can you just introduce yourself? Tell us who you are.
VLADISLAV INOZEMTSEV: My name is Vladislav Inozemtsev (ph). I'm a professor of economics.
MALONE: Vladislav was born in the Soviet Union, and he was in Moscow in the early 1990s when all of this strange money stuff was happening. And he explained to us that sometimes companies would pay their workers in things, in goods.
INOZEMTSEV: For example, if you are paid in, you know, towels, in vodka, in some furniture, whatever, you can just offer it to your own workers, either for personal consumption or they can sell it.
MALONE: And sure, who doesn't want some towels and some vodka? But it is not practical to schlep boxes of towels to the grocery store assuming that they would even accept your towels as payment.
BLANCHARD: And so, Vladislav says, people who had been paid in towels or whatever then had to find a way to sell those towels.
INOZEMTSEV: For example, I remember that my mother at the time lived in Belarusian (ph). And I took my car and went there several times a year. So you have many markets on the side of the road when the people were trying to sell beddings and towels and some other stuff just because they got it as a kind of payment.
MALONE: So you're driving to go visit your mother, and along the street, you see - what do they look like? Little kiosks or little just - do people set up a tent?
INOZEMTSEV: Yeah, they were not small tents. They were actually places maybe 10 miles from each other with dozens of tents.
MALONE: Did you ever stop when you were driving and buy anything at any of these places?
INOZEMTSEV: Yes. Yes. Sometimes. They were cheap, and it was quite common.
MALONE: But for those people who were working at the factory or whatever and then they had to then also become a retailer to sell their bedding, they had two jobs. Like, there's a lot of inefficiency that gets passed down.
INOZEMTSEV: Extremely, extremely. It was a very inefficient economy.
BLANCHARD: Vladislav says there's this idea that in certain situations, good money replaces bad money very easily, meaning if there's a form of money that does those three money things better, it's going to naturally and quickly replace the worse money.
MALONE: And in the very early '90s in Russia, you could see this happening in the real world. The ruble had become bad money. Towels and bricks were not perfect, but in some ways they were better money.
BLANCHARD: After the break, a better-er (ph) form of money that also reveals the heart of the Russian economy.
(SOUNDBITE OF MUSIC)
BLANCHARD: One expert we talked to while researching this story told us that people sometimes refer to Russia as a gas station with an army.
MALONE: Because, of course, Russia produces a lot of oil. But Russia also has this gigantic, quasi-state-owned energy company called Gazprom. It is one of the biggest natural gas producers in the world, and it's this kind of holdover from the Soviet economy.
BLANCHARD: And as the USSR started to open up to the world, Gazprom was one of the few enterprises that could compete globally. It could sell gas and make real money.
MALONE: Barry Ickes, the economist, the witness to large piles of Soviet bricks, he told us that even though Gazprom got to be this global player, it still needed to be one of Russia's local, like, neighborhood energy companies. And so in the mid-1990s, that meant that Gazprom had to do business with a lot of former Soviet companies that were doing very badly at the time.
ICKES: Just everybody dealt with Gazprom. Gazprom is kind of like the government in some sense. Everybody dealt with Gazprom. And all these enterprises - lots of enterprises couldn't pay their bills. So the IOUs developed that way.
BLANCHARD: IOUs - in the mid-to-late '90s, IOUs, actual pieces of paper, started to circulate as yet another alternative to rubles.
MALONE: And these IOUs, these were not really something average citizens were dealing with. This was another currency workaround for businesses.
BLANCHARD: Barry gave us an example. So let's say there's this factory that makes machine tools that Gazprom wants.
ICKES: The machine tool enterprise delivers machine tools to Gazprom because Gazprom needs it to build the pipeline.
MALONE: Yeah. Here's your pipe - here's your pipe fittings. We made them for you. Yeah.
ICKES: Pipe fittings - Gazprom pays them with promissory notes on future natural gas.
BLANCHARD: Promissory notes - these are the IOUs. They're actually called veskels in Russia.
MALONE: And so, again, you got this machine tool place - still doesn't have cash. But you know what it does have after delivering its pipe fittings? It's got a lot of Gazprom veskels - IOUs.
ICKES: Now, the machine tool - I also need steel. When they have to pay for the steel, instead of paying for rubles, they pay with the IOUs to Gazprom.
MALONE: Right.
ICKES: Since everybody does need gas, they all know how valuable it is.
MALONE: I see. So at the end of that term - let's say it's a one-year promissory note - whoever is holding that note...
ICKES: Gets gas.
MALONE: They take it to Gazprom, and they get gas, for sure?
ICKES: They pay their gas bill.
MALONE: I see.
BLANCHARD: And then after Gazprom starts doing their IOU system, is that when - what happens then?
ICKES: Then basically everybody starts using those IOUs as a transactions medium.
MALONE: Russian businesses had sort of rapidly evolved a whole new currency. And instead of being on the gold standard, Gazprom IOUs - veskels - were the gas standard. It was a piece of fancy paper backed by the promise of actual gas.
BLANCHARD: And then a bunch of other businesses started issuing their own IOUs, their own veskels. So a company could pay its energy bill using veskels from the local power plant. Or they could pay their taxes using these kind of tax-offset-y (ph) veskel things from the government.
MALONE: Businesses would trade veskels or hold veskels on their company accounts. And the literal paper veskels - there were all kinds of different colors and shapes and sizes.
BLANCHARD: Just to give you a sense of this, Vladislav Inozemtsev, who was running a bank in Moscow at the time - even his bank had their own veskels.
INOZEMTSEV: It was a gray-blue piece of paper, like, in a letter format with all this, you know, good printing.
MALONE: Good printing, he says. It was printed at a factory that typically printed actual money.
INOZEMTSEV: And on the back side of the paper, you can see, I would say, six or ten places where you can write in that I transfer this to the company ABC Limited, and so you can just hand it many, many times from one company to another. And if there is no more space, you can come to our bank...
MALONE: (Laughter).
INOZEMTSEV: ...And we will exchange you another one, and you can once again transfer it to another company.
BLANCHARD: Do you remember the longest chain of transfers that you saw, like, how many times one of those things passed through different people's hands?
INOZEMTSEV: Forty, 50, easily.
BLANCHARD: Wow.
MALONE: That's incredible.
INOZEMTSEV: It was every - day-to-day practice.
BLANCHARD: Vladislav says, there was this weird thing, though, where his bank's veskel unintentionally looked a lot like the Gazprom one.
INOZEMTSEV: And so there were some, you know, kind of collisions when someone took our promissory notes, which was very similar to Gazprom, because it was just another name of the company, but the design was the same.
MALONE: Did anybody show up to your bank saying like, hey, you owe us a million dollars, and you're like, no, no, no?
INOZEMTSEV: (Laughter) Yes, yes.
MALONE: No, Gazprom owes you a million rubles.
INOZEMTSEV: Yeah, it was sometimes - yeah - that this was the case.
MALONE: So this was another evolution in the chain of good money replacing bad money in Russia.
BLANCHARD: And so there were all these different veskels that were the good money. And often the veskel that became dominant in a specific region was tied to whatever industry that region was built around. So, you know, in a mining region, that was the veskel from the diamond company.
MALONE: In a Siberian rubber town, that would be the tire company's veskel.
BLANCHARD: And, of course, there was the Gazprom veskel. And that was valuable anywhere in Russia, because think about what this piece of Gazprom paper is in terms of the three characteristics of money.
MALONE: Yeah. Number one, Gazprom's veskel was a great store of value. It was backed by actual gas, a relatively stable commodity.
BLANCHARD: Number two, a means of exchange - I mean, it was a lot easier to sign the back of a paper IOU than to bring, you know, a pile of bricks to the grocery store or whatever.
MALONE: And number three, unit of account - if every business knows about and uses gas, then it is not necessarily hard to do business in a currency that is basically gas.
BLANCHARD: Yeah. And at one point in the '90s, Russia's biggest companies were doing something like 70% of their business using barter and these other nonmonetary payments, like Gazprom veskels.
MALONE: Yeah. It was as if, in a way, Russian businesses had sort of reinvented money - these veskels, these promissory notes.
Again, Penn State's Barry Ickes.
ICKES: It's like a private money 'cause it's backed by a - it's a claim on a commodity.
MALONE: A - like a shadow government in a shadow currency.
ICKES: To some - that's a very good way to think about it.
BLANCHARD: Why is Russia still not just using Gazprom promissory notes as money at this point? Sounds like it was a - it was functioning kind of as a normal monetary system.
ICKES: Yes. But it's sort of useful only within the industrial sector where people are, you know, buying a lot of natural gas. Plus, you can't really have a banking system. Think about your books. Think about the financial books of an enterprise. You know, if you ever wanted to do anything, you can't do anything. You got IOUs in - for all these different goods. What's your balance sheet look like?
BLANCHARD: This bizarre period in Russia, this post-Soviet bartering and IOU economy - it was really short in the grand scheme of things. It lasted less than ten years. There were a ton of factors. But generally, as Russia stabilized, the Russian ruble also eventually stabilized. And frankly, this whole system was pretty subject to corruption and businesses not, you know, making good on these IOUs. So once the ruble is more stable, it was simply a more efficient form of currency for everyone. And so full circle - the ruble itself became the good money replacing bad money.
MALONE: And one of the reasons I like reporting on money is because a lot of times, and not always, but a lot of times it does reveal these realities that we sometimes just overlook or maybe we forget or perhaps we're being intentionally misled about. And in this case, like all along in this story, the money keeps telling us this same thing, which is, at its core, Russia is a resource economy. And when we talk about sanctions and economic pressure points, it just is important to remember that Russia is and has basically always been a gas station with an army.
(SOUNDBITE OF EAMONN PATRICK DOWNES AND MARK COUPE'S "TAILWIND")
MALONE: If you'd like to learn more about the way the transition from the Soviet Union to Russia shapes the landscape today, I cannot recommend highly enough the latest PLANET MONEY newsletter from my colleague Greg Rosalsky. You can read that or sign up for it at npr.org/planetmoneynewsletter. We're also available on social media, generally @planetmoney, and also by email - planetmoney@npr.org.
Today's episode was produced by Sam Yellowhorse Kesler. It was engineered by Isaac Rodrigues and edited by Jess Jiang. Alex Goldmark is PLANET MONEY's executive producer.
BLANCHARD: Special thanks to Clifford Gaddy, Michael Alexeev and Sana Krasikov.
MALONE: I'm Kenny Malone.
BLANCHARD: And I'm Dave Blanchard. This is NPR. Thanks for listening.
(SOUNDBITE OF EAMONN PATRICK DOWNES AND MARK COUPE'S "TAILWIND")
MARY CHILDS, BYLINE: Hey, everyone. I'm Mary Childs. I'm one of the hosts of PLANET MONEY. And I'm here to tell you about a subscription to Planet Money+. It's a great way to support our show and unlock sponsor-free listening. Subscribe now at plus.npr.org/planetmoney.
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] | null | [] | null | Despite falling after the invasion of Ukraine, the ruble has staged a remarkable comeback, becoming the best-performing emerging market currency this year. | en | /content/dam/onemarketing/aztrade/allianz-trade_com/en_gl/favicon/az-favicon.png/_jcr_content/renditions/cq5dam.web.180.180.png | Corporate | https://www.allianz-trade.com/en_global/news-insights/economic-insights/russia-rallying-ruble.html | EXECUTIVE SUMMARY
Against initial expectations, comprehensive sanctions did not plunge Russia into a currency crisis. Unlike other emerging market currencies during times of stress, the Russian ruble experienced a short-lived depreciation. After plummeting in the early days of Moscow’s invasion of Ukraine, the ruble has staged a remarkable comeback and has more than doubled against the US dollar from its March slump, becoming the best-performing emerging market currency so far this year.
Several factors explain why Russia averted a currency crisis despite the freeze of most of its central bank reserves. The current account surplus soared to a record USD58bn in the first quarter of 2022, and could climb as high as USD250bn (in the absence of a comprehensive embargo on energy exports and a sanctions-induced compression of imports). The Russian authorities also took timely countermeasures to orchestrate an “FX intervention by delegation,” including stringent capital controls, a temporary gold-fixing of the ruble and asking energy importers to switch payments to rublestogether with a steep policy rate rise to stabilize the ruble after it plummeted.
However, the ruble’s rapid ascent might have reached a turning point and could eventually backfire. Since the ruble trades in a very thin market (and mostly domestically, given the dramatic drop in demand outside Russia due to sanctions), its recent appreciation belies a struggling domestic economy, which is expected to slump into a severe recession this year - but it has real consequences. Since most energy exports remain FX-denominated, a stronger ruble hurts the government’s budget balance by lowering the local currency value, which could be further impacted by the potential for EU tariffs on Russian energy exports during the phase-out of oil imports. Last week, the central bank responded with the third rate cut since April to tame the currency’s appreciation. Going forward, the current upward pressure on the ruble is likely to subside over time as some of the Russian countermeasures expire, Russian energy exports become less competitive and the deteriorating economic outlook begins to weigh on the FX rate.
Beyond the effects on Russia’s currency, the “weaponization of finance” aimed a paralyzing Russia’s economy could also have long-lasting consequences on the global financial system. While some of the sanctions, such as the freezing of almost two-thirds of Russia’s FX reserves, were politically expeditious, they also raise questions about financial sovereignty in a strongly USD-dominated monetary system. We could reasonably see some countries start diversifying away from the US dollar and/or the Western-dominated global financial architecture over time, especially those that feel they could be targeted by sanctions at some point. Furthermore, Russia’s short-lived gold-fixing might serve as blueprint for a more serious attempt by countries that have sufficient gold reserves (or commodities exports) to depart from the current system of fiat currencies.
Russia has managed to avert a currency crisis despite heavy sanctions.
While the concept of the “weaponization of finance” is not new, it reached an unprecedented scale in the wake of Russia’s invasion of Ukraine. Overnight, about 55% of Russia’s USD630bn of pre-war FX reserves (Figure 1) were frozen and therefore unable to be used, leaving the Central Bank of Russia (CBR) mostly with domestically held gold reserves. In addition, the exclusion of most Russian banks from the international SWIFT payment messaging system, which was eventually broadened to also include the termination of correspondent bank relationships, made it virtually impossible for Russian banks to transact with their Western peers (Annex, Table 1). These financial sanctions were accompanied by export bans across different sectors, the blacklisting of certain supplies and targeted restrictions on economic activities by companies and individuals, including a partial embargo on energy exports. However, sanctions did not completely close Russia’s external account. Key commodities-related companies and banks were not affected by the sanctions, which has allowed the gas and oil flows to continue, but also money inflows into Russia.
Figure 1: Russia - International reserves by currency (January 2022, USD bn)
How has Russia managed to avoid a currency crisis? In response to the sanctions, the Russian authorities adopted a set of mutually reinforcing counter-measures. First, they imposed stringent capital controls (adding to slowing capital outflows due to trade sanctions on imports to Russia) by asking banks, exporters and households to cede most (80% ) of their FX holdings to the CBR. The aim of “rubelizing” the current account surplus was to prevent an excessive depreciation of the ruble while building – whenever possible – FX reserves that could substitute for the frozen ones.
The CBR also more than doubled (from 8.5% to 20%) the reference policy. Faced with comprehensive sanctions, monetary tightening was needed to discourage financial outflows (not covered by existing capital controls) - rather than reining in a surge of imported inflation (by reducing aggregate demand). Unlike during the last crisis in 1998 (and compared to other central banks during currency crises in the past), the CBR responded decisively and quickly. Since then, the CBR has lowered the policy rate to 11%, with two subsequent rate cuts, the latest one on 26 May.
Although short-lived, fixing the currency to gold provided additional support for the ruble. Russia had increased its gold reserves significantly since 2005 but stopped buying gold after Q1 2020 when the ruble weakened and the gold price soared. At the onset of the invasion, the CBR announced that it would resume its gold purchases to shore up its reserves in case monetization would be needed. However, it soon had to halt its purchases from banks, which had to satisfy increasing retail demand for gold amid a dramatically depreciating ruble. With domestic demand easing by the end of March, the CBR re-started its gold purchases from banks at a temporarily fixed price of 5,000 rubles per gram (which, at the prevailing RUBUSD exchange rate and international gold price was expensive, i.e., the fair value of the ruble in gold terms was lower; Figure 3). This arrangement (which was supposed to be in effect until end-June) was soon abandoned (on 08 April), and the price is again negotiated based on money demand. A closer analysis of Russian monetary aggregates and gold reserves suggests that it would have been challenging for the CBR to permanently install the gold-fixing of the ruble (Figure 3).
Figure 3: Russia-Gold-fixing of the exchange rate and monetary aggregates
In a complementary move to support the gold-fixing, the Russian authorities have tried to re-denominate gas exports into rubles. Since lower money demand reduces the flow of FX revenues from energy exports to the central bank, Russia required customers from unfriendly countries to directly pay for their gas imports in rubles. In combination with the gold-backing of the ruble, the measure effectively pegged Russian gas exports to the gold price. This way, the CBR could also mitigate the freeze of its foreign-held reserves due to sanctions by effectively delegating an FX intervention to banks providing rubles to energy importers.
The “rubelization” of Russian gas has likely contributed to a recovering FX rate. While the mandatory payment rule was announced in April, the exact timing remained unclear until two weeks ago. However, the announcement itself already had an immediate impact on the currency. Since reaching its trough in April, the ruble has appreciated by more than 50% against the euro, thanks to rising external demand for rubles through energy trade, and the exchange rate now stands at pre-Ukraine war levels. Note that the Russian ruble has become the best-performing currency year-to-date against the USD (+30%).
Most European countries have adopted a payment solution that would allow them to meet the Russian demand without falling afoul of current financial sanctions. The current arrangement foresees hard currency payments of “unfriendly importers” being intermediated by Gazprombank (which, in turn, provides rubles to Gazprom) . The European Commission issued a recommendation last week stating that such payment would not run afoul of current restrictions if “EU operators […] make a clear statement that they consider their contractual obligations to be completed when they deposit EUR or USD with Gazprombank [rather than after the payment is converted into rubles]”. At the same time, the EU operator should seek confirmation from the Russian side that the payment is finalized as soon as the EUR / USD transfer is made; this implies also that no fee for the FX transaction is due from the EU operator (Figure 4). This way, importers steer clear of dealing in rubles, which would violate current sanctions.
Figure 4: Proposed procedure by the CBR for RUB payments
However, the first dominoes have already fallen in Russia’s gas “rubelization” gambit. Almost one month after announcing that “unfriendly” countries would have to pay for imported gas in rubles, Russia’s state-owned gas giant Gazprom cut off gas supplies to Poland and Bulgaria on 27 April after the countries refused to agree to new payment terms. Several weeks later, on 21 May, Finland was also cut off after applying for NATO membership. Refusing countries cited concerns that the “two-accounts payment arrangement” (via Gazprombank) proposed by the Russian central bank might still run afoul of current sanctions. Nevertheless, the combination of all three measures have amounted to a de facto “FX intervention by delegation” through Russian banks, satisfying the external demand for rubles (given the constrained firepower of the CBR).
Could the appreciation of the ruble backfire?
The recent ruble rally astonished financial analysts, who were speculating on further selling pressure. The ruble even strengthened briefly to 51 to the US dollar, a level last seen in 2015, having briefly slumped past 150 in early March. However, the liquidity of ruble trading has decreased dramatically, with a considerable amount of rubles changing hands at prices outside the CBR’s official ruble fixing (Figures 5 and 6). Since the ruble trades in a very thin market (and mostly domestically given the dramatic drop in demand outside Russia due to sanctions), its indicative price could be misleading and belies a struggling domestic economy, which is expected to slump into a severe recession this year. Since most energy exports remain FX-denominated, a stronger ruble hurts the government’s budget balance by lowering the local currency value. Given that the US sanctions’ carve-out of coupon payments of Russian government debt has expired, a deteriorating fiscal balance could provide incentives for Russia to default on its outstanding debt, especially given its rapidly declining dependence on international capital markets.
The CBR has stepped in to tame the recent appreciation of the ruble by loosening its monetary stance. Last Thursday, Russia’s central bank slashed its main interest rate by 3pp to 11% (down from 14%) on the back of slowing inflation. The stronger ruble has made imports cheaper, helping to keep a lid on inflation, which has begun to ease in recent weeks. Annual inflation slowed to 17.5% as of 20 May, from 17.8% in April amid a noticeable decrease in inflationary expectations. The third rate cut since early April helps further unwind the initial rate hike to 20% at the end of February to stabilize the ruble after it plummeted during the initial phase of the war in Ukraine.
Figure 5: Russia – Volume of next-day settlements at official exchange rate fixing
While the current developments are very unlikely to create near-term damage to the current USD-centric financial system (or the USD’s dominant status), they play into the narrative of a potential transition towards a different monetary regime in the long run.
While its share in central banks’ reserve assets has been declining over the last decade, the US dollar remains by far the dominant reserve currency globally (Figure 10). As the largest and most open economy with the largest financial system, the US is the world’s foremost importer of capital (with two thirds of global assets denominated in US dollars). In addition, more than 40% of global trade is invoiced in US dollars (Figure 11). Even the euro is not a close substitute for the US dollar. Nonetheless, the emergence of China and the rapidly evolving financial system, including the digitalization of payment systems, beg the question of whether if the dominance of the US dollar and its anchoring role in the post-Bretton Woods monetary system could decline over time (Box 1).
Figure 11: Financial openness | ||||
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] | null | [] | null | /static/longread/1/src/f/media/favicons/apple-touch-icon-57x57.png | null | In 1860, the Emperor of Russia Alexander II signed a decree to establish the State Bank. This was the beginning of the history of the Bank of Russia. Initially, the State Bank was mainly engaged in short-term commercial lending. However, historical developments changed everything. In the 1920s, the bank was a key actor in the restoration of the country’s financial system and the development of exchange relationships. During the hardships of World War I and the Great Patriotic War, it focused on covering military expenditures and the supply of the army and households with money. In the Soviet Union, the State Bank was a lender for the centrally planned economy, issued money and carried out international settlements. In the challenging 1990s, the bank did its best to keep the economy stable and created the system of foreign exchange regulation and control. Following traditions and extensively introducing innovations, today the Bank of Russia is a technologically advanced mega-regulator responsible for the stability of the entire financial system of the country. | |||||||
9245 | dbpedia | 1 | 27 | https://www.dallasfed.org/research/economics/2023/1010 | en | Russian ruble buckles under trade sanctions, declining export earnings | [
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Russia’s currency is losing value, falling 40 percent against the U.S. dollar since December 2022. To stabilize the currency, the Russian central bank held an emergency meeting in August and raised interest rates from 7.5 percent to 11 percent.
The move is reminiscent of Russia’s 1,150 basis-point (11.5 percentage-point) policy rate increase in response to Western financial sanctions after its Ukraine invasion. However, the current currency malaise is different. This time, the ruble’s decline is attributable to trade sanctions and plunging export earnings rather than sanctions affecting the central bank and individual financial institutions.
Initial impact of sanctions appears fleeting
The Group of Seven and its allies imposed harsh financial and economic sanctions on Russia beginning in late February 2022, following the invasion. Severe limits were placed on a number of Russian banks, and most foreign exchange reserve assets of the Russian central bank were frozen.
The moves aimed to collapse the Russian currency, making it hard to finance and conduct the war. Initially, in early March, this appeared to work. But the Russian central bank reacted, sharply boosting its policy rate and imposing strict capital controls to limit capital outflows. The response prevented the ruble’s collapse.
In May 2022, we concluded that the combination of Western financial sanctions and Russian capital controls stabilized the currency by effectively shutting down a large portion of the capital and financial account. In balance-of-payments accounting, a country’s net receipts of capital can be divided into a current account (the trade balance plus net income from overseas investment) and the capital and financial account (net receipts due to purchase and sale of foreign assets).
A positive current account—a trade surplus—puts upward pressure on the value of a currency as more capital flows into a country than flows out. Similarly, net purchases of a country’s assets put upward pressure on the value of the currency.
On the eve of the Ukraine invasion, Russia had a large trade surplus, and net capital flows into Russia through the capital and financial account were negative, that is, investment capital was flowing out. Taken together, the trade account put upward pressure on the value of the currency, while net foreign purchases of overseas assets applied downward pressure.
The combination of Western sanctions and central bank capital controls removed this downward pressure, and the Russian currency appreciated. As Chart 1 shows, after the immediate depreciation following the invasion, the Russian currency appreciated, and by the summer of 2022, the ruble traded well above prewar levels.
Downloadable chart | Chart data
In our previous article in 2022, we concluded that as long as the Russian trade surplus held, the Russian currency had found a new, stable equilibrium. This continued to be the case until December 2022, when the ruble’s value steadily declined, falling 40 percent through mid-September 2023.
Why did the stable equilibrium with a strong trade balance fall apart? Chart 2 plots Russian goods exports and imports. The chart, which begins in 2013, shows that Russia has run a strong trade surplus, but this surplus has fallen over the 18 months since the invasion.
Downloadable chart | Chart data
There has been a discrepancy in Russian trade data since February 2022. The chart plots exports and imports from two sources, International Monetary Fund Direction of Trade statistics and the Russian central bank. Before 2022, these two series were nearly identical, but after the invasion, a gap opened between the two. Explaining that discrepancy is beyond the scope of this article, but importantly, the trade surplus has been this low only twice over the past decade—during the COVID-19 crisis of early 2020 and in January 2016.
Declining value of energy exports drives overall exports lower
Crude oil, petroleum products, natural gas and liquefied natural gas (LNG) made up nearly half of all Russian exports in 2021. Crude oil and petroleum products alone totaled 36.6 percent of total exports ($181 billion); natural gas accounted for 12.7 percent of exports ($63 billion). Russia was the second-largest producer of crude oil and natural gas globally behind the United States by year-end 2021.
Interestingly, previous episodes of low Russian trade surpluses, in 2016 and 2020, occurred when the price of Brent crude fell below $30 a barrel (Chart 3). Brent crude, the North Sea benchmark, now trades above $80. The chart also shows that before the invasion, the price of Russian oil, Urals crude, was nearly identical to the price of Brent.
Downloadable chart | Chart data
Since the invasion, Russian oil on a cost, insurance and freight (CIF) basis has traded at a discount to Brent of around $20 to $30 per barrel. The free on board (FOB) price discount is larger at Russian loading ports, as that excludes insurance and freight. So even though Brent crude trades above $80 per barrel, the price Russia receives for its oil is much less.
Sanctions help explain lower Russia oil receipts
The European Union (EU) countries, along with the U.S., the U.K. and some Asian nations, sharply curtailed their Russian oil imports following the invasion. The U.S. and the U.K. placed embargoes on Russian oil early in 2022, and the EU imposed an oil embargo and a price cap in December 2022. The result has been a dramatic shift in the buyers for Russian oil (Chart 4).
Downloadable chart | Chart data
Before the invasion, almost 5 million barrels per day of Russian crude oil and oil products went to the EU, the U.S., the U.K. and the Asian members of the Organization for Economic Cooperation and Development. This represented over 60 percent of Russia’s total oil exports. Now 0.7 million barrels per day go to those countries, or less than 10 percent.
However, the total quantity of Russia’s oil exports has remained fairly stable, as China, India and other emerging markets buy the embargoed oil that once went to Western countries. Federal Reserve Bank of Dallas research earlier this year explained how this trade diversion helped ease the embargo’s impact on Russia.
Ongoing research supports the view that the limited number of potential buyers for Russian crude and refined products increased their bargaining power, allowing purchasers to demand greater discounts to the global market as early as March 2022.
Because of the embargo, Russian petroleum exports must travel significantly longer distances to the new buyers than to the Western buyers, driving up shipping costs. The price cap, instituted in December 2022 for crude oil and in February 2023 for petroleum products, allowed Western companies to continue insuring shipments as long as they did not exceed a maximum price.
While trade diversion didn’t much affect the volume, the pricing discounts led to a decline in the value of Russian petroleum exports. The International Energy Agency estimates Russia’s export revenue from crude and refined products fell 30 percent from the first half of 2022 to the first half of 2023, while volumes were largely stable.
Russia’s natural gas export volume, price decline
The other side of Russia’s energy export mix is natural gas. Before the Ukraine invasion, 84 percent of Russia’s exported natural gas was transported via pipelines, and the remaining 16 percent was LNG. Increased European LNG imports from non-Russian sources, warmer winter weather and European energy conservation measures contributed to sharply lower natural gas demand over the past year. The European price fell from $48 per million British thermal units (MMBtu) during the second half of 2022 to $14 per MMBtu during the first half of 2023.
Slightly more than 80 percent of piped natural gas from Russia went to Europe in 2021. The volume of Russian gas through German, Polish and Ukrainian pipelines to Europe declined by roughly 90 percent from 2021 to the first half of 2023. In the short run, there are few alternative outlets for selling piped gas.
Liquefaction facilities or new pipelines to move gas to new, non-European customers take time to construct. Plus, piped gas that would have been sold to Europe before the invasion is now probably not exported at all. While there are no official estimates regarding the value of Russian natural gas exports for 2022 and 2023, it is likely that lower prices coupled with lower export volumes amounted to a decline in the value of natural gas exports from the first half of 2022 to the first half of 2023.
Price discounts for crude oil will likely persist because of the bifurcation of buyers and the extended distance exports must travel to their destination. Piped gas volumes to Europe continue to remain low. While Russia aims to increase exports of natural gas to China, it will take many years to build new pipelines.
With measures targeting Russian exports likely to persist, the country’s balance of payments will remain under pressure, leading to continuing currency weakness. | |||||
9245 | dbpedia | 2 | 25 | https://www.atlanticcouncil.org/blogs/new-atlanticist/russia-and-china-have-been-teaming-up-to-reduce-reliance-on-the-dollar-heres-how-its-going/ | en | Russia and China have been teaming up to reduce reliance on the dollar. Here's how it's going. | [
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] | 2023-02-22T17:06:01+00:00 | Squeezed by sanctions, Russia has turned to Chinese yuan and gold, but both introduced new vulnerabilities and inconveniences. | en | Atlantic Council | https://www.atlanticcouncil.org/blogs/new-atlanticist/russia-and-china-have-been-teaming-up-to-reduce-reliance-on-the-dollar-heres-how-its-going/ | Just days before Russia’s brutal invasion of Ukraine began in 2022, we warned that Russia and China’s collaboration on dedollarization—the process of reducing an economy’s reliance on the US dollar for international trade and finance—would not sanction-proof Russia’s economy. And it did not. As a result of unprecedented Western sanctions, Moscow overnight became unable to transact in dollars and euros—the world’s dominant currencies.
Russia has since pursued alternatives to manage its trade and reserves. Chinese yuan and gold became the stars of the show, but both introduced new vulnerabilities and inconveniences. Yuan makes Russia dependent on Beijing’s goodwill, while gold is not as sanctions-proof as Moscow expected, and Russia has had a hard time scaling up its illicit gold trade.
Yuanization creates new vulnerabilities
In February 2022, heavily sanctioned and isolated, Russia had to find an alternative to dollar-denominated transactions. The new currency needed two characteristics: It had to be relatively stable and minted by a non-sanctioning country. Of the few eligible options, such as the Indian rupee and South African rand, China’s yuan was the only one actively seeking an international role and able to take it on.
Moscow has rapidly intensified its use of yuan in two main ways: increasing the yuan’s share in Russia’s reserves and switching to direct ruble-yuan trade instead of using the dollar as an intermediary. At the end of last year, Russia’s Finance Ministry increased the permitted share of yuan reserves in the National Wealth Fund to 60 percent. Meanwhile, ruble-yuan trade increased eighty-fold from February to October 2022. With each of these actions, Russia created new vulnerabilities and cemented itself as the little brother in the relationship.
Ruble-yuan exchange rate vulnerability. China is Russia’s top trade partner, and its tight control of the yuan-ruble exchange rate creates risks for Russia’s balance of trade. A tightly controlled yuan may inherently seem more stable than a floating dollar, but Chinese authorities have managed the ruble-yuan exchange rate to its advantage before. Specifically, shortly after the invasion began, the Chinese government relaxed yuan controls to allow the rapidly depreciating ruble to fall faster, thus avoiding subsidizing Chinese goods for Russians by giving them more yuan than their rubles were really worth. As a result, it became much more expensive for Russia to buy Chinese goods. In other words, China could choose at any time—for political reasons or otherwise—to make Chinese imports really expensive and Russian exports to China much cheaper.
Chinese bond liquidation risk. The Russian Central Bank might not be able to sell Chinese bonds and convert the proceeds to rubles if Beijing decides to impose restrictions on yuan outflows. The liquidity risk of Chinese bonds is one of the main reasons why central banks around the world avoid purchasing them. In March 2022, the Russian Central Bank and National Wealth Fund were estimated to own 140 billion dollars’ worth of yuan-denominated assets, money that could be not be obtained by Moscow if Beijing decides to impose capital controls.
Currency swap lines elimination risk. Russia is vulnerable to Beijing’s political will when it comes to currency swap lines—an agreement between two central banks to exchange currencies. Moscow has used bilateral swap lines with the Chinese Central Bank to build up its yuan reserves. In 2014, Russia made a three-year currency swap deal worth 150 billion yuan and renewed it for another three years in 2017. In January, the Russian and Chinese central banks agreed to set up a new yuan currency swap instrument. However, such agreements expose Chinese financial institutions to US secondary sanctions for helping Russia’s sanctions evasion efforts. If Beijing determines that the threat of secondary sanctions is becoming substantial, it will soon abandon the swap lines with Russia.
Last year saw Russia take the first major steps toward the yuanization of its economy, a necessity for Moscow that in turn is increasing Beijing’s clout in international finance. While the yuan helped Russia weather the effects of sanctions in the short term, it also opened a Pandora’s box of new vulnerabilities for Moscow. For as long as sanctions remain in place, Russia will have to stay on the right side of Beijing.
Is Russia turning to gold-digging?
Moscow has been looking for alternatives to the euro and dollar since its first invasion of Ukraine in 2014. Its gold holdings, for example, have nearly tripled since 2014. Moscow is currently sitting on 150,000 gold bars valued at about $140 billion, mostly stacked in Russian vaults out of reach of Western asset freezes.
Russia is also the world’s second largest gold producer, and miners are keen to sell excess gold in international markets. Beijing has been an enthusiastic buyer. Russia is reportedly selling gold to China at a discount of up to 30 percent, and gold transfers from Russia to China increased by 67 percent in 2022.
Nevertheless, we haven’t so far observed a global mass sell-off of Russian reserve gold for four reasons.
Legal trade of Russian gold has been mostly blocked off.
Illicitly transporting 150,000 gold bars is a logistical nightmare.
Moscow has not yet felt an intense need for financing due to its energy export windfall in 2022.
Most critically, Russia will struggle to find willing and able partners to scale this illicit trade. Fellow sanctioned countries, the likes of Iran, Venezuela, and Myanmar, are deprived of dollars and euros themselves. Other gold hubs such as China, India, and the United Arab Emirates (UAE) are not interested in mass purchases due to the heightened risk of exposure and Western retaliation.
Formal channels cut off. The London Bullion Market Association’s decision to suspend all Russian refineries from its accredited list in March 2022 and a gold import ban by Group of Seven (G7) countries in June 2022 meant that Russian gold’s traditional sales routes to the United States and Europe were cut off. Russia also cannot use gold as collateral for loans or for location swaps—a transaction in which two parties agree to exchange gold they have in different locations without physically moving the gold. But no one would want to swap their non-sanctioned gold with sanctioned Russian gold. Moscow has hence turned to illicit means to liquidate its gold.
Illicit channels are also challenging. Gold’s physical nature can make it a hassle-ridden financial asset since transporting gold is more difficult than digital assets. But its advantage is its ability to be moved outside of electronic financial networks. Russia could use gold to bypass sanctions by partnering with non-Western gold hubs including China, the UAE, and India in exchange for cash or barter. Refineries are permitted to list intermediary countries as the source of unrefined gold, meaning its Russian origin is fairly easy to mask. While refined gold is inscribed with the refinery’s name and date, making it readily identifiable as Russian, it can be remelted and then resold as anything-but-Russian gold.
Recent history is replete with precedents for gold smuggling by sanctioned economies. In 2019, Russia reportedly flew Venezuelan gold around the world and exchanged it for cash dollars which were then flown back to Caracas. In 2012, Iran sold natural gas to Turkey in exchange for gold, which was then sold for cash in Dubai.
Potential partners will remain hesitant to trade a sanctioned asset in large quantities unless the risk of exposure is alleviated. But as illicit trade of other commodities between Russia and non-Western countries expands, Russian President Vladimir Putin’s shadow fleet of ships grows, and networks become entrenched, risks could be managed and more gold could clandestinely start flowing with it.
China’s global yuanization ambition
Russia and China have partnered in dedollarization since 2014. But Russia’s invasion of Ukraine and the resulting Western sanctions have created an imbalance in the urgency for dedollarization.
In addition to increasing its yuan reserves and eliminating the dollar intermediary in yuan-ruble exchange, Moscow is planning its own international standard for gold and other precious metals where prices will be fixed to members’ national currencies, likely including the yuan.
China is all too happy to assist Russia in this process. Beijing has a longer-term goal of competing with the dollar and of advancing the yuan as an international currency. Russia will be a test case as the first large economy to embrace the yuan in this way. With the power dynamic in the relationship strongly tilted in China’s favor, Russia’s urgency will permit the People’s Bank of China to experiment with financial and monetary policies in a controlled environment while easing the yuan into a more international role.
Maia Nikoladze is an assistant director for economic statecraft at the Atlantic Council’s GeoEconomics Center. Follow her on Twitter @Mai_Nikoladze.
Mrugank Bhusari is an assistant director with the GeoEconomics Center focusing on international finance and global governance. Follow him on Twitter @BhusariMrugank.
Further reading
Thu, Jun 30, 2022
Why Russia’s economy is more resilient than you might think
New Atlanticist By Josh Lipsky
With each recession, Russian institutions—and the population itself—have become increasingly inured to economic trauma.
Thu, Sep 22, 2022
The dollar has some would-be rivals. Meet the challengers.
New Atlanticist By Ananya Kumar, Josh Lipsky
What are the realistic alternatives to the dollar that US and allied policymakers should be paying attention to? And how can they respond?
Fri, Feb 18, 2022
Russia and China: Partners in Dedollarization
Econographics By Mrugank Bhusari, Maia Nikoladze
Russia has virtually stopped receiving Dollars for its exports to China. Does the US have reason to be concerned?
Image: Russian President Vladimir Putin speaks with Chinese President Xi Jinping before an extended-format meeting of heads of the Shanghai Cooperation Organization summit (SCO) member states in Samarkand, Uzbekistan September 16, 2022. Sputnik/Sergey Bobylev/Pool via REUTERS | |||||
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] | null | The rublification of all trade and investment relations between Russia and its partners is a first and very important step on the way from currency sovereignty to a new role for the ruble as a reliable alternative to other currencies, writes Kubatbek Rakhimov, Executive Director of the Applicata Center for Strategic Decisions Public Foundation, Advisor to the Prime Minister of the Kyrgyz Republic (2019-2020). | Valdai Club | https://valdaiclub.com/a/highlights/rublefication-or-the-prospects-of-the-ruble/ | The rublification of all trade and investment relations between Russia and its partners is a first and very important step on the way from currency sovereignty to a new role for the ruble as a reliable alternative to other currencies, writes Kubatbek Rakhimov, Executive Director of the Applicata Center for Strategic Decisions Public Foundation, Advisor to the Prime Minister of the Kyrgyz Republic (2019-2020).
The ancient Chinese saying, "May you live in interesting times", implies there’s something disturbing to come. But life is always more complicated than speculative constructions, and the world is going through one such moment at the present time. There is a second Chinese proverb that more accurately reflects the situation: "a changing world produces heroes". This has most clearly manifested in the economic life of the Russian Federation and the economies of the post-Soviet space gravitating towards it.
Without dwelling on many events of the spring and autumn of 2022, one of the most important tectonic shifts can be touched upon. I call it "rublification", to put it simply. In fact, we have witnessed the transition of the Russian energy trade to Russian rubles, a sharp contraction of excess imports while maintaining export earnings, and a corresponding stabilisation of the ruble against the US dollar, as Russia’s currency is 15-20% higher than it was in January 2022. I think that in a few years more profound scientific conclusions will be made on many aspects of the sovereignisation of the national currency in the face of an unprecedented break of the Russian monetary system with the US dollar and the euro.
Moreover, we are witnessing a sharp imbalance in the exchange rates of the so-called collective West. The euro collapsed to almost below the 1:1 ratio to the US dollar - the pound sterling has rushed to the same place and the Swiss franc exchange rate has been bouncing back and forth for a long time. As some economists bitterly joke, these currencies can be safely replaced by the US dollar: they have caught up with it and it is already easier for them to become a single currency.
Let's return to the ruble. Speculative assets rushed to the Chinese yuan, through which market players somehow project the US dollar, euro or other currencies. The volume of yuan trading on Russian stock exchanges by October 2022 has already exceeded the volume of transactions with the US dollar. This is normal, it is inevitable, especially in the context of the explosive growth in imports from China, replacing the flows that previously came from the EU and the US, as well as from a number of "unfriendly" countries. However, outside of speculative games, the transfer hot stocks to the yuan as a safe harbour, and servicing the trade flows between the Russian Federation and PRC, we almost do not notice a very important point.
The sovereignisation of the ruble has become an interesting process of returning (you can’t call it otherwise) to the trade of the allies of the Russian Federation in rubles, bypassing the US dollar and euro. It is clear that on the global scale of world trade, these two currencies together exceed half of world trade turnover, while the national currency of the world's second-largest economy, the Yuan, accounts for only 4-5%. With all this, few people imagine the prospects of the ruble as a convenient trading and investment currency, at least on the Eurasian continent. If the power of the United States is largely based on the issuance of the dollar and the formation of a neo-colonial system where the whole world is dependent on the Federal Reserve System, then we must respond in a similar way.
The rublification of all trade and investment relations between Russia and its partners is a first and very important step on the way from currency sovereignty to a new role for the ruble as a reliable alternative to other currencies. That is, the transition to a model where Russia transfers all its investment, credit and trade relations to its own ruble, like the transition of payments for hydrocarbons in the spring and summer of 2022, is quite possible and feasible, but will come with certain reservations.
In particular, there are assets of the Russian Federation in various international financial institutions. Take, for example, the Russian-Kyrgyz Development Fund (RKDF) with an authorised capital of $500 million. It was created to facilitate the adaptation of the Kyrgyz economy to the realities of the Eurasian Economic Union and to strengthen the industrial and agricultural components of the national economy. It is clear that this is entirely the money of Russian taxpayers, and now, in a period of geopolitical turbulence, it is important to understand how prudently it’s being used, on the one hand, and on the other hand, why the assets of the RKDF are still denominated in US dollars, and not in Russian rubles or Kyrgyz soms.
Moreover, when creating the RKDF, it was assumed that the assets would total 1 billion US dollars, which at that time was comparable to the deposit base of the entire banking system of Kyrgyzstan. But it turned out that even half a billion dollars could not be easily and quickly used in the industrial and agro-industrial projects of a country with a GDP slightly below 8 billion US dollars per year.
In fact, the total volume of potential investment projects in Kyrgyzstan exceeds 20 billion US dollars, since it includes the construction of a railway network with access to China, powerful hydroelectric power plants, the development of various mineral deposits, and good potential for agricultural products that are in demand not only amid markets in the EAEU, but also in other countries.
The excessive dollarisation of the Kyrgyz economy (more than half of loans are issued in US dollars) and extremely high loan rates in the national currency have led to a situation where lending to the real sector has become a problem, not to mention direct investment and project financing. Now there is a unique chance for the rublification of investment, credit and trade relations between Russia and Kyrgyzstan as a pilot project. The presence of a unique instrument like the Russian-Kyrgyz Development Fund, a "clean" balance in interstate relations (Russia for 31 years wrote off all the debts of Kyrgyzstan, an amount totalling more than 700 million US dollars, and is no longer a creditor of the external debt of the Kyrgyz Republic from 2016) make it possible to conduct this economic experiment quickly and painlessly. Russia is a key trading partner of Kyrgyzstan both in terms of exports and imports, transfers of citizens of the Kyrgyz Republic working in the Russian Federation account for more than a quarter of Kyrgyzstan's GDP - all this together gives hope for the success of the rublification of relations between allies in the EAEU as a whole. In fact, the same RKDF allocates loans in US dollars, demanding in return the priority of purchasing equipment or semi-finished products from Russian suppliers, but again in "unfriendly" currencies! It is time to cut this Gordian knot of dependence on a third party, and for this there are all the necessary prerequisites.
Extrapolation of the experience of the rublification of Russian-Kyrgyz relations to other members of the EAEU and participants in the CIS free trade zone (the key stakeholders are Azerbaijan, Uzbekistan and Tajikistan, which are not members of the EAEU) will allow the obtaining of the so-called minimax, that is, the maximum result with minimum effort in the face of risks and losses associated with geopolitical turbulence.
The US dollar actually has many faces and it has an interesting projection called the Eurodollar. Typically, this is a US dollar held outside the US banking system which is used to service international trade. The array of Eurodollars is so large that, in a hypothetical case of "homecoming", they could completely destroy the US economy (at least its financial system), causing a hyperinflationary tsunami. Such predictions are regularly voiced by economists (for example, Mikhail Khazin), but such a scenario is still unlikely. We are interested in the algorithm for building a stable system of circulation of the “external ruble” within the framework of actual rublification. Most likely, China's unique experience in splitting the yuan into onshore and offshore yuan, as well as issuing panda bonds denominated in yuan, will most likely be more applicable in this case. |