The Ripple Effect of the Weakening Russian Ruble
The Russian ruble has been gradually recovering from the losses caused by the tightening of fiscal policy. Currently, the exchange rate stands at around 94 to 95 rubles to the dollar, compared to the previous rate of around 100 rubles. This decline suggested that the Russian currency was nearing its lowest point since the start of the invasion of Ukraine.
However, it appears that the weak ruble has not only affected Russia but also its neighboring countries. Bloomberg reports that Kazakhstan, which seemed resilient to the economic turmoil in Putin’s regime, has also felt the impact. This is despite the fact that Kazakhstan faced several restrictions imposed by the West.
According to Bloomberg, the Kazakh currency, tenge, weakened against the dollar more than any other currency in the past week, second only to the Argentine peso. The Kazakh Central Bank stated that this decline is a „reaction to the weakening ruble.” The National Bank of Kazakhstan (NBK) further explained that they were unable to intervene in the foreign exchange market to improve the exchange rate because exporters were unwilling to dispose of their hard currency, such as the dollar, due to fears of further tenge depreciation.
These issues in Kazakhstan come as a surprise, as the correlation between the ruble and the tenge had weakened recently. Aliya Moldabekova, deputy governor of the Kazakh Central Bank, argued that the Russian ruble now has its own fundamental story unrelated to the tenge.
Furthermore, the southern neighbors of Russia have benefited from the economic sanctions imposed on Putin’s regime following the outbreak of the war in Ukraine. Foreign investors who had left the Russian Federation after the illegal invasion have relocated to these countries.
In conclusion, the weakening of the Russian ruble has not only affected Russia itself. Kazakhstan, previously considered to be immune to the economic fluctuations in Putin’s regime, has experienced its own set of challenges. The impact of the ruble extends beyond Russia’s borders, demonstrating the interconnectedness of the regional economies.
Source: Bloomberg (No URL provided)