Soon after Russia invaded Ukraine and Western sanctions set in on Moscow, the ruble tanked to historic lows. Yet, four months later, the ruble has become the world’s best-performing currency against the US dollar.
Russian political scientist Ilya Matveev told NPR last week that the currency’s rebound isn’t a sign of a strong economy, nor does it signal that sanctions aren’t working against Russia.
“The strong ruble is a bad indicator of Russian economic performance generally because it only reflects the fact that imports have fallen so sharply that importers simply do not need so much foreign currency because they’re unable to import goods from…Western countries,” Matveev said during an interview with All Things Considered.
He noted that the effect of wartime sanctions has devastated Russia’ economy, and long-term prospects for Moscow are bleak because of Western businesses halting operations there, soaring inflation, and the heavy toll on locals.
A soaring currency, he said, is not a good measure for the broader economy because it has more to do with trade prospects falling off during the war.
“So the strong ruble only reflects the fact that there is no use for foreign currency in Russia right now,” Matveev said. “And this is, of course, a very bad thing for the economy.”
Meanwhile, on Sunday, Russia saw its first foreign debt default in more than a century, reports say. The nation missed a deadline to pay $100 million in dollar- and euro-denominated interest on two foreign currency bonds, the Wall Street Journal reported.
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