IS RUSSIA HAVING AN ECONOMIC CRISIS?

No, says Chris Weafer, CEO of Macro-Advisory Ltd. “The lower ruble is partly a reflection of the effect of sanctions, but it doesn’t indicate an underlying economic crisis.”

The falling ruble actually has helped the government with its budget. It means more rubles for every dollar of earnings from oil and other products Russia sells. That bolsters spending on the military and on social programs aimed at blunting the impact of sanctions on the Russian people.

“They’ve tried to compensate for the drop in the dollar value of oil receipts with the weaker ruble, so that therefore the deficit in terms of spending could be contained and more manageable,” Weafer said.

Amid sanctions and restrictions on moving money out of the country, the ruble exchange rate is largely in the hands of the central bank, Weafer said. It can tell major exporters when to exchange their dollar earnings into Russian currency.

“The weakness was planned, but it’s overdone and they want to pull it back,” Weafer said.

Janis Kluge, a Russian economy expert at the German Institute for International and Security Affairs, said the ruble decline is “not very welcome” to the Kremlin.

While not a full-blown crisis, “this is the closest we came to a real economic problem since the start of the war,” Kluge said.