The Central Bank of Russia is responsible for dictating foreign exchange reserves and policy as well as foreign currency reserves. The volatility of the RUB is just one indicator of the deepening economic recession plaguing the country. Most recently, concerns about Russia’s foreign currency reserve further exacerbated concerns, as reports suggested that in the absence of rebounding oil prices, the struggling nation’s foreign currency reserves could be depleted by the end of this year.
The S&P rating for Russia stands at BB+. Moody's rates the Russian Federation’s sovereign debt is Ba1. Fitch's credit currently reports Russia’s rating as BBB-.
In the year over year examination of inflation, numbers reported January 16th show an increase in consumer prices of 9.8%. Although the number was less than expected, the numbers reflected the consumer impact of the country’s financial struggles of the past year.
At the close of 2015, the Russian economy suffered a contraction of 3.8%, its worst performance since 2009 according to report from Russia’s Economic Development Minister.
GDP Annual Growth Rate for Russian Federation averaged 3.23% in the decade between 1996 and 2005 as reported by the Federal State Statistics Service. The Russian economy contracted at 4.1% in the third quarter of 2015, a number consistent with analyst estimates. This steep contraction comes as a result of lowering crude oil prices, a significant obstacle to growth in one of the world’s largest oil-producing countries. Domestic consumption declined considerably, resulting in depreciation, and marked increases in inflation.
Government and Trade
In the face of significant contraction in Russian economic growth at the close of 2015, the road back to prosperity for the country may be a long one. In response to the plunge in tax revenues caused by oil price decline - a major blow for the largest exporter of crude oil in the world - the government recently announced budget cuts of 10% across the board.
- Russian Ruble (RUB)
- Phonetic Spelling
The origin of the word "rouble" is derived from the Russian verb руби́ть (rubit'), which means "to chop, cut, to hack." Historically, "ruble" was a piece of a certain weight chopped off a silver oblong block, hence the name. Another version of the word's origin comes from the Russian noun рубец, rubets, which translates to the seam that is left around the coin after casting, therefore, the word ruble means "a cast with a seam"
In English, both the spellings "ruble" and "rouble" are used. The "rouble" is preferred by the Oxford English Dictionary, but the earliest use recorded in the English language is the now obsolete "robble". The "rouble" was derived from the transliteration into French used among the Tsarist aristocracy, and today, there are two main usage tendencies: one in North America, the "ruble" and the other for English speakers outside the US, the "rouble". Neither tendency is absolutely consistent.
The Ruble has been the official currency of Russia for nearly 500 years. The kopek was first introduced in 1710, with a value of 1/100th of a Ruble.
In December, 1885, the Russian Ruble was revalued to a gold standard and pegged to the French Franc at 1 Ruble = 4 Francs. This value was revised in 1897 to 1 Ruble = 2 2/3 Francs. During World War I, the gold standard was dropped leading to devaluation of the Ruble and hyperinflation. With the outbreak of World War I, the gold standard peg was dropped and the ruble fell in value, suffering from hyperinflation in the early 1920s. With the founding of the Soviet Union in 1922, the Russian ruble was replaced by the Soviet ruble. The "second Ruble" was introduced in 1922, followed by the "third Ruble" in January 1923. The "fourth Ruble" also known as the "Gold Ruble" was issued in March, 1924. Following World War II, the "fifth Ruble" was introduced in order to revalue the currency and reduce the amount of paper notes in circulation. The introduction of the "sixth Ruble" occurred in 1967 and remained the official currency of Russia during the transition from the Soviet Union to the modern Russian Federation, though new notes were issued in 1993 to reflect the change.
The "seventh Ruble" was issued on January 1, 1998, essentially devaluing the Russian Ruble at a rate of 1 new Ruble = 1,000 old Rubles. The ruble was redenominated on 1 January 1998, with one new ruble equaling 1,000 old rubles. The redenomination was a purely psychological step that did not solve the fundamental economic problems faced by the Russian economy at the time, and the currency was devalued in August 1998 following the 1998 Russian financial crisis. The ruble lost 70% of its value against the U.S. dollar in the six months following this financial crisis.