August is a traditionally uneasy time in Russia, as historically economical shakeups happened during this month. August 1998 is remembered for its dreadful default when the local currency suddenly dropped from the exchange rate of 6 rubles for 1 US Dollar to 25. August 2018 started with a rapid decline of the local currency again. From under 62 rubles for 1 USD the exchange rate jumped to nearly 68 rubles for 1 USD on 12 August 2018.
On 21 August the exchange rate was 67 RUB for 1 USD.
MK.ru questioned experts about their precisions as to what would happen to the local currency in the near future.
Experts predict a significant drop in value for Russian Ruble by the end of 2018
Ph.D. in economics Igor Nikolaev stated that people should not be scared of a potential default because ruble had seen more sizable depreciations regardless of the time of the year. For example, 1 euro equaled 100 rubles (USD $1.49) in December 2014. As to the current value of ruble, 1 US dollar will equal 80 rubles (USD $1.19) and 1 euro – 90 rubles (USD $1.34) by the end of 2018, according to Nikolaev.
Exchange rates depend on the economic situation, which is definitely not stable in Russia. The latest economic sanctions against Russia are one of the main causes of the sudden drop. However, Nikolaev stated that Russians were not going to face severe ruble crisis this year.
Experts predict that by the end of 2018 1 US Dollar may cost 80 RUB.
Price hikes
Russian citizens are not happy with the impact of the increased VAT rate, announced at the same time in June 2018 as the rise of the pension age, which is still the most discussed issue in Russia, especially because of the fact that the draft law hasn’t been voted in as yet and locals feel there is still room to protest against it and influence its acceptance by the Russian Duma. Which is, certainly, a rather utopian concept, as government’s plans are predictably accepted by the Russian Parliament with the overwhelming majority of voters supporting such legislations.
According to Nikolaev, food prices will be the first to increase as well as any other goods that are in high demand. However, the cost of drugs is expected to remain the same.
Soon Russians will need more money to travel abroad as the prices of airline tickets are going to be significantly higher. A similar fate possibly awaits domestic flights.
Now people have to cope with both the rise in prices and the weaker ruble, which imported affects their ability to purchase imported goods or travel abroad, and in the near future will influence prices for local goods and services as well, since most machinery and parts, as well as other components and raw materials, are purchased abroad.
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Probably it`s nothing else than monetary policy.
Help the local production, make more expensive the import goods compared with the local, help the inland tourism, and make more expensive to travel abroad.
Inflation is low, federal debt level low, so the situation is not too bad.
I am a stock market trader and have shares in companies in 15 countries. In Russia I have shares in 5 companies and plan to buy into 2 or 3 more. The fall of the Ruble did not affect Russian shares very negative – some in fact went significantly up because you can buy more shares with the same money or otherwise pay less for the same shares. I expect much growth potential in the value of Russian shares in general as long as Putin stay in power and don’t make the same political mistakes as western Europe. The Ruble… Read more »
Robbie, an unorthodox prediction! Russian Ruble to cost more than the US Dollar? Never happened since the Soviet times when there was no open sale of dollars — in fact, you’d get in jail if caught selling or buying foreign currency. It was a crime on par with treason.
Don’t forget all the denominations the Russian ruble went through. Honestly, I can’t see Russian ruble worth more than US Dollar in any foreseeable future.
Elena, I did not say that the RUB will be worth more than the USD. What I mean by “you will be happier” is that the “Buying Power” of the RUB will increase while the “Buying Power” of the USD will decrease as soon as things “explode” in the USA. That can be when Donald Trump loose power and/or democrats take over and/or a racial or civil war starts there. At least one of these are highly likely in the future. Depending on the severity, the possibility of a much stronger RUB and much weaker USD remains. Save this one… Read more »
Robbie, that’s quite a prediction. Ruble never got stronger in history after the Perestroika (1987). But there were quite a few denominations of Russian Ruble, to remove all the excessive zeroes due to 10,000% inflation.