Ruble turmoil tests Russians' resilience amid economic woes

Some of the harshest insults are found on Telegram, directed at Kremlin spokesman Dmitry Peskov, who openly mocked Russians shocked by the ruble's decline. On November 27, one dollar cost over 120 rubles in Russia (compared to 90 in September). This marks the largest weakening of the Russian currency since the start of the invasion of Ukraine in 2022. However, on Thursday, the rate recovered slightly.

"The rise in the dollar exchange rate will not affect Russians because they receive their salaries in rubles" - Peskov said. On the Russian-language Telegram service, a special stamp featuring an image of a clown is used to mark particularly foolish remarks. Peskov's statement attracted thousands of such clown stamps. Russians pointed out that "his daughter worked in Paris and earned in euros". "In our hellish land, heroes are left with lard and potatoes". "Brilliant strategist Putin, we started the war with the dollar at 60 rubles, now it’s double." "No more foreign trips, and what about food prices?" are among the most common complaints from Russians.

Below are the words of consolation to Russians spoken by Dmitry Peskov, the Kremlin spokesman

Russian economist Vyacheslav Shirayev warned that if the ruble's devaluation continues, food prices in Russia could rise by 20-30%, fuelling inflation. It's not just about imported products. Vladimir Fisinin, head of the Russian poultry industry, warned that 98% of chickens are raised using foreign additives, so meat prices will increase.

Gazprombank has been subjected to American sanctions, cutting it off from the dollar settlement system. The bank managed payments of Russian corporations selling oil and gas abroad. Blocking Russia's cash flow, and thus blocking trade exchange, would be the ideal way to stop the war. It’s unfortunate this is happening only now - explains Dr. Adam Karpinski, an economist and expert at WSB Merito University in Wroclaw, regarding the fall of the ruble's value.

Let's add that Washington introduced the potential for so-called secondary sanctions, which involve similar restrictions on entities continuing cooperation with Gazprombank.

- We would like to see Russia descending into the abyss of an economic crisis, like the eruption of a societal rebellion, but for now, these are Western wishes - commented the WP interlocutor. He emphasizes that the costs of the war and economic effects, such as high prices, will be borne by average citizens, but it's difficult to gauge how much they will endure. - This could be several years - he believes.

- In Russia, all imported goods will become more expensive, but are they essential for the Russians themselves? McDonald's has withdrawn from the market, yet their lives didn't collapse. This society is structured somewhat differently. The average Russian - outside large cities - believes they can survive as long as there are potatoes, alcoholic beverages, and tea from a samovar. They typically rationalize: since there is a war, one has to suffer so that things will be better later - Dr. Karpinski continues.

According to Karpinski, Russia's economic problems will depend on the behaviour of countries like China or India and South American countries. - If they are willing to engage in barter, e.g., goods for raw materials, new restrictions won't be painful for Russia. As for food, Belarus, a long-time key supplier of these types of products, could be Russia's saving grace. Russia might import some goods via Kazakhstan or Turkmenistan, adds Dr. Karpinski.

On major Russian portals, the most-read articles are about the ruble and the effects of its devaluation. - We will see price increases as early as February. Cucumbers and tomatoes will be the most expensive. Prices are hard to predict - said Russian journalist Alexei Elayev, deputy general director of the Spar chain in Russia.

The popular blog "Yarnarnyi Kaliningrad" considered this statement the "quote of the day". It sarcastically remarked that tomatoes and cucumbers are becoming the gold of Russian cuisine.

Earlier, a wave of publications swept through Russian media with titles like "people stopped using butter". In Russia, people eat "bare bread" with cold cuts or cheese. This is said to be the result of butter prices rising above the equivalent of CAD 3.50 per stick. There were reports of decreased sales of butter.

The customs services of Kaliningrad reported cases of smuggling food from Poland. Dozens of kilograms of sausages from the Biedronka chain were seized. As for foreign trips, many are now over - report Russian business editors.

Inflation in Russia is expected to reach 15%, but bank lending rates are already 30% annually, Russian economists claim. - However, I don't see any catastrophe for the authorities. My colleagues and I have always said that the stability of the economy is its ability to support Putin's war, and that's all - commented Russian economist Vyacheslav Inozemtsev. He is quoted by "The Insider" magazine.

- With such a ruble exchange rate, the country's budget will be implemented with a surplus because oil is sold for dollars. The authorities will have additional rubles for the war and social spending. Yes, they will largely be devalued money, as we already lived in the '90s - Inozemtsev further explains.

In response to reports about the effects of sanctions and the currency crisis, Vladimir Putin appeared on television broadcasts. He boasted about new Oreshnik missiles and read from a note the test results, stating that dozens of guided warheads attack the target at a speed of about 3.2 km/s. The temperature at the center of the explosion reaches about 3970 degrees Celsius. Putin threatened that decision-making centres in Kyiv could be targeted.