Russia’s invasion of Ukraine dealt a severe blow to its economy, and its currency plummeted.
According to media reports, Russia and Ukraine are taking various measures to maintain the value of their currencies during the war, some of which have been successful.
Before the invasion of Ukraine, the exchange rate of one US dollar in Russia was 80 rubles (local currency), which fell to 150 rubles after the entry of Russian forces into Ukraine on February 24.
This dramatic depreciation of the Russian currency has dealt a major blow to the economy, with various measures now leading to 105 rubles a dollar.
According to economic analysts, Russia, in an attempt to keep its currency from depreciating and recovering, gave the impression that it was negotiating with Ukraine and that the dispute would be resolved, after which the ruble returned to 5 105.
Keeping all foreign currency in the central bank from exporters under tight grip on capital and restricting access to money held by ordinary consumers in their banks are two measures that have kept the ruble from falling further.
Russia’s central bank also backed the ruble in a bid to maintain its value in the face of global sanctions and a tough economic blockade by the West.
“Over the last ten years, Russia’s central bank has intervened directly in the market only a few times, and now it is proving to be beneficial in keeping the exchange rate in its favor,” said analyst Alexander Kudran.
Martial law, on the other hand, was enforced in Ukraine, and the central bank suspended all currency trading and set a rate of one dollar to 29 hryvnia (local currency).