Strong ruble could hurt Russian businesses, official warns

MOSCOW

Russia’s minister for economic development warned Wednesday that if this trend continues, the ruble will strengthen to levels not seen in seven decades.

The ruble plunged to an all-time low in the first weeks of Russia’s invasion of Ukraine in February. It was down as much as half a percent to 150 against a dollar. The ruble began to recover and has now reached its highest exchange rate in a month since May 2015.

Wednesday’s official exchange rate by the Russian Central Bank was 52.9 to $1. While some see the rate as a sign Russia is weathering Western sanctions it also means that Russian exports are more expensive due to the strong ruble.

Russian news agencies quoted Maxim Reshetnikov as saying that “I believe my colleagues will confirm the fact that the profitability of many industry, even export-oriented, is now negative at this exchange rate.”

He said, “If this situation continues for several months, I think many businesses may come to the notion not only of curtailing investments, but also of the need for current production plans to be adjusted and reduced production volumes.” said.

Elvira Nabullina, the head of Central Bank, suggested that Russia should shift its economy away from dependence on export revenue this month.

Analysts believe that the strength of the ruble is due to high global oil and natural gas prices and wide-ranging sanctions, which means Russia is purchasing fewer imports.

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