Moscow (Business Emerge), August 16: In Russia, a new unspoken rule seems to be in effect: steer clear of associating the ongoing conflict with the recent decline of the rouble. Despite the currency’s 9% drop against the U.S. dollar, which coincided with Ukraine’s unexpected strike on the Kursk region, Russian media and analysts from state-controlled banks have largely avoided drawing a direct connection between the two events.
The decline in the rouble began on August 6, the same day the Kursk region experienced its most significant foreign attack since World War Two. The rouble reached its lowest point in 10 months against the dollar and also hit a record low against the yuan during the August 13 trading session. State-owned banks have predominantly attributed this downward trend to various economic pressures.
According to sources within the currency trading sector, foreign banks were primarily responsible for offloading the Russian currency during this period. These sources, who requested anonymity due to the delicate nature of the situation, indicated that domestic financial institutions were less active in the market.
Analysts at Sberbank, Russia’s largest bank, cited U.S. sanctions on Moscow’s Stock Exchange, implemented on June 12, and a reduction in currency sales by exporters as primary factors behind the rouble’s depreciation. They noted that the easing of mandatory currency sales requirements, along with the conclusion of tax and dividend periods, may have led exporters to reduce their foreign currency transactions.
Meanwhile, the Russian central bank has remained silent on the issue, and the government has not provided any comments in response to inquiries. Prominent Russian business publications have reported on the rouble’s decline, yet they have refrained from linking it directly to the attack on Kursk. Instead, analysts featured in these reports have focused on the impact of dwindling exports and the relaxation of forex sale requirements for exporters.
This reluctance to connect the rouble’s decline with the events unfolding just 530 km (330 miles) southwest of Moscow reflects a broader effort within Russia to prevent negative economic news from reaching the general populace.