The ruble has lost nine percent of its value after Washington sanctions targeted Russian businesses. But that’s not the reason for the ruble’s depreciation, according to US President Donald Trump.
“Russia and China are playing the currency devaluation game as the US keeps raising interest rates. Not acceptable,”Trump tweeted on Monday.
The Russian Central Bank free-floated the national currency in late 2014 and focused on replenishing reserves instead. This means that only supply and demand determine the value of the ruble in comparison with the US dollar, euro, pound sterling, Japanese yen and other currencies. Over the four years, the Central Bank has repeatedly said it is not abandoning the strategy.
“Trump sounds pretty strange by saying such things about Russia. With the exception of the last week, the Russian ruble had been strengthening for 1.5 years. The Chinese yuan has been strengthening since 2015. That’s why saying that Russia or China are playing the devaluation game shows either Trump’s lack of knowledge or his politically biased stance,” Konstantin Korischenko, former deputy chairman of the Central Bank of Russia (CBR), told RT.
The US president’s tweet comes at a time when the Russian currency is seeing a very turbulent period after two years of stability. The new round of US sanctions has hit the country’s key exporters in metals and mining, which has led to a logical depreciation of the ruble.
On Monday, the ruble was falling slightly in anticipation of another round of sanctions from Washington over Moscow’s backing for the Syrian government. “The Russian financial market will remain extremely nervous and volatile – with a short-term focus on the scale and rhetoric of the new US sanctions,” analysts at Societe Generale SA’s Russian unit including Yury Tulinov said in a research note, as quoted by Bloomberg.
On Monday, the ruble fell slightly against the dollar and the euro, trading at 62.3 and 77.1, respectively. The Russian stock indices, the ruble-denominated MOEX and the dollar-traded RTS, were both down around 1.5 percent.