Russian Ruble (RUB): Overview of Russia's Currency

What Is the Russian Ruble (RUB)?

The Russian ruble is the national currency of the Russian Federation. The ruble is the second-oldest currency still in circulation, behind the British pound. It is made up of 100 kopeks.

Key Takeaways

  • The ruble is the currency of the Russian Federation.
  • The ruble has been used since the 13th century, making it the second-oldest national currency still in existence, behind the British pound.
  • The ruble's exchange rate tends to rise and fall with global oil prices, given Russia's position as one of the world's top exporters of oil and natural gas.
  • In December 2021, the Bank of Russia began testing the prototype of a digital ruble.

Understanding the Russian Ruble (RUB)

The ruble (RUB) has been used since the 13th century and has been through a number of incarnations during that time, including multiple revaluations and devaluations. The most recent changes occurred before the fall of the Soviet Union in 1992 and during the redenomination in 1998. The 1998 redenomination made one new ruble worth 1000 old rubles.

In recent years, the currency's exchange rate has generally tracked global commodity prices, especially oil prices, because Russia's economy heavily depends on exports of oil, natural gas, and other natural resources. The ruble collapsed in the second half of 2014, losing about half its value versus the U.S. dollar as global oil prices plunged. Economic and financial sanctions imposed by the U.S. and European Union on Russia in July 2014 over its invasion of Ukraine also helped weaken it.

In late 2017, the National Bank of Ukraine ordered that all Ukrainian banks and other financial institutions were forbidden to circulate Russian banknotes that depict images of Crimea, a region of Ukraine that Russia annexed in 2014.

Following Russia’s invasion of Ukraine in February 2022, the U.S., the EU, and other nations imposed strict sanctions on Russia’s largest financial institutions and enterprises, including Russia’s central bank and energy giant Gazprom. These sanctions sent the value of the ruble plummeting.

Russia's Economy

Russia is more than twice as large as the contiguous 48 U.S. states and is blessed with enormous natural resources. Yet Russia’s annual gross domestic product (GDP) ranked only 11th worldwide in 2021, is only 7.72% the size of the U.S. economy. That's because Russia relies heavily on exports of natural resources, rather than higher-value-added industries. In fact, in terms of GDP, Russia trails much smaller countries, such as Italy and France.

Ongoing political tensions have hurt the Russian economy, as the country has repeatedly faced sanctions from the international community. The value of the ruble along with many Russian companies plummeted after Russia began its invasion of Ukraine in February 2022.

The Digital Ruble

President Vladimir Putin announced in 2017 that the Bank of Russia would issue a Central Bank Digital Currency (CDBC). Though many countries are now exploring CBDCs, Russia was one of the earliest countries to do so. In December 2021, a prototype of the digital ruble was completed and the first transfers using the digital ruble's platform were successful. The Bank of Russia announced that 12 Russian banks were ready to begin using the digital ruble.

The value of the digital ruble is identical to the value of a regular ruble.

In February 2022, many commentators suggested Russia could evade international sanctions using cryptocurrency. Though a CBDC is much different from a private cryptocurrency, a digital ruble could limit Russia's dependence on using foreign currencies, such as the U.S. dollar.

Article Sources
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