### Summary
The Russian stock market's recent gains are a facade and the country's economy is in decline, according to Yale researchers. Russia's frozen foreign assets and the depreciation of the ruble have artificially inflated stock market profits. Additionally, the economy is suffering from a loss of confidence, with people and money fleeing to neighboring countries.
### Facts
- 📉 The Russian stock market's recent gains are an illusion, masking the true state of the country's struggling economy.
- 🧊 Russia has frozen inflows and outflows of foreign assets, preventing investors from cashing out and propping up the stock market.
- 💸 The depreciation of the ruble has artificially inflated the value of Russian stocks, as the country's commodities are sold in foreign currencies.
- 💼 Workers, academics, and oligarchs are leaving Russia, taking with them technical and intellectual capital essential to the country's economy.
- 💔 Trust in President Vladimir Putin and confidence in the Russian economy have eroded, leading to a lack of domestic and foreign investment.
- 🌍 Neighboring countries like Armenia, Georgia, and Kyrgyzstan have become destinations for Russian money and talent fleeing the country.
- 📉 Experts warn that Russia's economy could continue to decline and the country may even become a failed state if the costly war in Ukraine persists.
### Summary
Russia's currency, the ruble, has plunged to a 16-month low, leading to surging prices of sushi due to the country's economic challenges and rift with the West.
### Facts
- 💰 Russia's currency, the ruble, hit a 16-month low last week, as the country's current account suffers from Western sanctions.
- 🍣 Local prices of sushi in Russia are expected to surge by as much as 30% in the coming weeks due to the weakened ruble and strained relations with the West.
- 📈 Russia's official inflation rate reached a five-month high of 4.3% in July, but some economists estimate it to be over 60%.
- 🍱 Restaurateurs in Russia are already facing increased costs of sushi ingredients, such as rice, fish, and seaweed, which are imported and dependent on the dollar exchange rate.
- 💸 The embattled ruble sank past 100 to the dollar, prompting the Russian central bank to raise interest rates significantly.
- 📉 Capital outflows, reduced reliance on Russian oil by European nations, and falling export revenues have added to Russia's economic challenges.
- 🇷🇺 President Vladimir Putin held an emergency meeting to discuss measures for stabilizing the exchange rate, including export restrictions and limits on foreign currency movement.
Russian President Vladimir Putin stated at the BRICS Summit that the decline in the global role of the US dollar is an irreversible process, emphasizing the bloc's de-dollarization efforts.
The Russian economy is facing several major issues, including a labor shortage, soaring inflation, a tumbling ruble, the risk of recession, a real estate bubble, and the nationalization of foreign businesses, which could lead to stagnation and a fall in GDP growth in the long term.
The Russian ruble's recent volatility and decline in value reveals the underlying struggle of funding the military without damaging the national currency or causing inflation, while the Kremlin's efforts to stabilize the economy in the short term may not prevent long-term economic decline and stress on the ruble.
Russian energy company Gazprom reported a net loss of 18.6 billion roubles ($197 million) in the second quarter of 2023 due to the collapse of gas exports to Europe.
Russian President Vladimir Putin warned that Russia's economy would suffer if inflation is not controlled, stating that the central bank had to raise interest rates to 12% due to increasing inflation, causing difficulties in forming business plans. However, he stated that there were no concerns about rouble volatility and that the government had tools to keep currency and markets under control.
The Central Bank of Russia has raised its key lending rate to 13% in an effort to combat inflation and stabilize the struggling ruble, which has weakened significantly against the dollar due to decreased exports and increased imports. The country also faces challenges with low unemployment and a brain drain of talent to other former Soviet states. However, the Russian government remains optimistic about economic growth forecasts for 2023.
The Russian rouble's decline is causing tensions between the central bank and finance ministry, as inflation rises and growth slows, threatening the country's ability to wage war effectively.
The Russian rouble weakened past 100 to the dollar due to foreign currency outflows and a shrinking current account surplus, but recovered slightly in early trade on Tuesday.
The Russian ruble briefly fell past 100 against the dollar, indicating weaker spending power for Russians due to slower economic growth and higher inflation amidst the war in Ukraine.
Russia's economy is being increasingly structured around war, with nearly one-third of the country's spending next year devoted to defense, redirecting funds from sectors like health care and education; however, the economic impacts of the war, including inflation and a weakened ruble, are causing concerns for citizens and the government alike.
Russia has reintroduced some capital controls in an effort to stabilize the ruble as the cost of war with Ukraine continues to impact the economy, with the currency gaining 3.4% after Moscow announced exporters would be forced to convert foreign revenues into rubles. These controls are similar to those implemented in 2022 after the start of the conflict, where Russia ordered exporters to swap 80% of their foreign currency revenues for rubles and banned residents from making bank transfers outside of Russia. The ruble has lost over a third of its value against the dollar this year due to the war and declining revenue from the energy industry.
Russia's rouble strengthened against the US dollar after President Vladimir Putin ordered the mandatory sale of foreign currency revenues to support the currency, but experts warn that businesses should plan for a weaker rouble in the long term.
Russia's rouble strengthens as Moscow imposes capital controls to stabilize the currency, similar to measures taken after the invasion of Ukraine in 2022, but experts warn that the rouble may weaken again in the future.
The Russian rouble surged to a six-week high against the dollar after the Bank of Russia unexpectedly raised interest rates to 15% and exporters increased foreign currency sales.
