Last week, the Russian finance ministry claimed that the ruble was “extremely undervalued”. Admittedly, it made the claim when the currency was around 70 to the dollar, and the exchange rate has since strengthened to 55. But given that the rate was not much above 40 a couple of months ago, we suspect it would continue to assert that the ruble was mispriced. We are sceptical that this is the case, though, since the deterioration in Russia’s terms of trade that has resulted from a lower price of oil will have reduced the equilibrium level of the ruble substantially. Granted, the price of oil appears to be finding some support around $60 per barrel. But we don’t expect it to rebound sharply.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services