Strengthening of the Russian ruble against the U.S. dollar in the second quarter of 2022 could have «tangible and complex consequences» for the economies of Belarus, Kazakhstan, Armenia and Kyrgyzstan, which together with Russia form the Eurasian Economic Union (EAEU). This forecast was made by analysts of the Eurasian Development Bank (EDB) in a review of the state of the region’s economies.
Experts note that the phenomenon of recent months is unprecedented strengthening of the Russian ruble against major currencies. The ruble was temporarily traded in June at about 50 against the dollar, which has not been registered since 2015. The strengthening of the ruble is a consequence of the contraction of domestic business activity, foreign exchange restrictions and the forced abandonment of the fiscal rule. Imports to Russia have fallen by more than 40 percent since the beginning of the year and showed slight signs of recovery only in May. The measures taken to ease foreign exchange restrictions and the authorities’ announcements of possible interventions in the foreign exchange market led to weakening of the ruble at the beginning of July to 60-63 per dollar.
It is still premature to talk about a stable ruble weakening trend, since the fundamental factor of pressure on the ruble towards its strengthening in the form of a high trade surplus still persists. In the baseline scenario, an average exchange rate of the ruble against the dollar is expected to be 62 in Q3 and 70 in Q4.
It is noted that in April-June, the strong ruble already had a negative impact on the national currencies of the EAEU member countries. Further, this could mean an acceleration of inflation and a decrease in purchases of goods from Russia for Minsk, Nur-Sultan, Yerevan and Bishkek.
«Tenge (the currency of Kazakhstan) has weakened against the ruble by more than 30 percent since the beginning of the year. A significant weakening occurred in June. A similar trend is observed in Kyrgyzstan, where the som has been at around 79.5 per dollar since the beginning of June, and has depreciated by 14 percent against the Russian ruble. The Belarusian ruble has weakened against the Russian one by 17 percent in June, and by almost 40 percent since the beginning of the year. The Armenian dram has weakened by 20 percent since the beginning of the year,» Evgeny Vinokurov, EDB Chief Economist, said.
