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Russia's Economy and the Rouble.

Guys quick question regarding the Russian Rouble.

I keep hearing/reading how the Rouble has declined against the USD mostly due to the falling oil prices and Western Sanctions. But I don't exactly understand how..

Yes, Russia is extremely dependent on oil and it accounts for 50% of the government's budget, but what does falling oil income have to do with the rouble losing value?

Thanks.
They seem to be in trouble.
Reply 2
Avatar for Pulse.
Pulse.
18
Capital flight and less demand for the rouble.

Posted from TSR Mobile
Reply 3
Avatar for _Fergo
_Fergo
19
When demand for a currency falls (in this case, demand for the rouble is falling due to the sanctions against Russia's goods and services) then the exchange rate falls as well, meaning that eg 1 rouble would be worth less than before.
(edited 9 years ago)
Original post by *Stefan*
When demand for a currency falls (in this case, demand for the rouble is falling due to the sanctions against Russia's goods and services) then the exchange rate falls as well, meaning that eg 1 rouble would be worth less than before.


Which in turn means that 1 rouble will buy less.
Russia is hugely dependent on the gas and oil sectors of its economy, when the price drops far less money is coming into the country, therefore the demand for the ruble is reduced. What we've essentially seen with the recent nosedive is a complete loss of confidence in the currency and the economy, investors are trying to get their assests out of the country as fast as they possibly can, it's capital flight.
Reply 6
Avatar for ronmack
ronmack
12
114$ to 53$ you still don't see a difference?

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