cross-posted from: https://beehaw.org/post/17867338

The Russian ruble tanked past 115 per USD in January, the lowest on record when excluding the immediate shock after the start of Russia’s invasion of Ukraine in the first quarter of 2022, as sanctions isolated Russia from global financial and commodity markets.

The currency was halted from domestic trading against major pairs after Western nations sanctioned the Moscow Exchange, magnifying the difficulty for companies to secure hard currency and forcing the Bank of Russia to set forex prices since June.

This added pressure as China’s weakening economy limited demand for goods from Russia’s main export partner, further denting the influx of foreign exchange. The impact on government revenues from energy exports drove Moscow to partially relax the capital controls it had to prop up the ruble, letting it depreciate to support its budget deficit. Despite this, political pressure drove the CBR [Central Bank of Russia] to cut its tightening cycle short in December, compounding pressure on the currency.