In response to Russia’s plummeting ruble, President Vladimir Putin has taken unprecedented steps to stabilize the national currency. The ruble’s sharp decline, the worst since the Ukraine conflict, has led Putin to issue a special directive aimed at major exporters, especially those in the energy sector.
In recent weeks, the ruble’s value has dropped to or below one American cent. Despite initial attempts by the Kremlin to downplay the situation, the severity of the crisis is apparent from various indicators, including actions taken by both the central bank and Putin himself.
To address the crisis, Putin signed a decree requiring significant exporters to convert a portion of their foreign currency earnings. This move was supported by the Bank of Russia, despite its earlier belief that such a measure would not be effective.
Explaining the decision, Putin stated, “Due to budgetary needs, we require a somewhat lower dollar rate, which is why the foreign exchange revenue decree was signed,” as reported by the “Kommersant” newspaper.
The undisclosed decree applies to 43 corporate groups in sectors like energy, metallurgy, chemicals, forestry, and agriculture. The affected companies have not been named by the Kremlin, citing “hostile actions from certain countries.” However, major firms like Gazprom and Lukoil are likely included.
As of the recent data available, the exchange rate stood at 97.5 rubles per dollar, indicating a 53.14% increase in the dollar’s strength against the ruble over the past year.
Putin’s move highlights the urgency of the situation and the government’s determination to stabilize the ruble. By targeting major exporters, the government aims to regulate the foreign currency market and prevent further devaluation of the national currency. The effectiveness of this measure remains to be seen, but it reflects the seriousness with which the Russian government is approaching the economic challenges posed by the ruble’s decline.