Ruble falls dramatically, reason related to oil sanctions? WB lowers Russian economic forecast

WB lowers Russia's GDP growth forecast for 2024. (Source: Reuters)

According to information on the exchange, at its peak, the price of the USD reached 81.03 Rubles/USD. A few hours earlier, the USD had surpassed the 80 Rubles/USD mark for the first time since April 18, 2022.

The euro exchange rate has also increased sharply - the currency is trading at 88.5 rubles/euro, also a record level in nearly a year.

Analysts explain the sharp weakening of the ruble at the end of the tax period in March.

In addition, the Russian currency remains under pressure from the uneven exchange rate between exports and imports and oil sanctions.

The large discounts on the sale of Russia's Urals oil, the accumulated budget deficit amid falling oil and gas revenues and sharply increased spending are also showing.

According to a source of Vedomosti, the authorities have sharply reduced the forecast for the average exchange rate of the ruble for 2023 - from 68.3 rubles/dollar to 77 rubles/dollar.

Another source said the ruble's weakness was due to low foreign currency sales by exporters, withdrawals by citizens, as well as foreign companies selling assets in Russia and converting rubles into foreign currency to withdraw to their jurisdictions.

According to another source, the Ruble exchange rate was strongly affected due to a significant decrease in USD liquidity in the market.

On the same day, the World Bank (WB) lowered its forecast for Russia's gross domestic product (GDP) growth in 2024 from 1.6% to 1.2%.

According to the WB, the Russian economy is expected to grow by 0.8% in 2025. For 2023, the WB forecasts Russia's GDP to grow by 3.1% - 0.2 percentage points lower than the forecast given in January.

Meanwhile, Ukraine's economy will grow 0.5% this year, after shrinking 29.2% in 2022 due to the conflict.

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