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Wednesday, March 22, 2023

Russian ruble’s return to pre-war levels no sign of economy back on track

EconomyRussian ruble's return to pre-war levels no sign of economy back on track

Moscow (The Times Groupe)- As a result of capital controls and higher interest rates, Russia has bailed out the ruble making it the world’s best-performing currency year to date. However, it is still too early to tell whether the economy has recovered.

How should nations’ economy be evaluated?

Is a currency’s appreciation relative to its counterparts an indication that economic growth is occurring smoothly?

As far as Russia goes, the situation is quite complicated since it is a country at war and an economy in turmoil, suffering from inflation and sharp economic contractions due to heavy sanctions imposed by Western countries.

The country has been subjected to Western sanctions since 2014, when it illegally seized Ukraine’s Crimean Peninsula, and is better prepared to deal with an initial wave of economic disruption this time around than it was eight years ago.

Particularly the Ruble, the currency of Russia, surprised the world by recovering from sanctions imposed by the West in early March that sank it to a low of 150 per US dollar. By mid-May, the index had risen to 61.25, the highest level in 28 months.

Though some believe this recovery is a sign of economic resilience, well-known economists warn that things are not as bright as they seem.

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