Russians losing faith in ruble

The proportion of Russian citizens who expect the exchange rate of the Russian national currency to drop has grown by 70% since spring 2018 and reached a record since the start of the study (2013).

44% of respondents expect the ruble to weaken in the next 12 months, the results of the Central Bank of Russia’s July survey indicate.

This is 17 percentage points more than in March, and higher than the previous record from August and September 2014 (41%). Thus the Russian currency market’s April drop, the government’s plans to raise taxes, and the stagnation of real disposable income have undermined the population’s trust in the economy’s recovery, their own well-being, and the stability of the ruble, Finanz observes.

The proportion of Russians who expect the ruble to strengthen has more than halved since the start of the year – from 14% to 6%, which is also a historic low. The number of Russians who believe in a stable exchange rate has shrunk from 35% in January to 28%.

At the same time, the consumer attitude index, which assesses income levels and people’s opportunities to spend and save, has continued to fall. After a record drop in June (13 points), the indicator has fallen a further 1 point, and its current value of 92 points is the lowest since July last year.

The index assessing the country’s prospects in the coming year, which reached a historical high of 123 points, has lost 24 points in two months and dropped to a low since November 2016 (96 points).

The personal financial standing index has updated its low from last August in light of the deteriorating situation in the labor market: respondents’ assessment of unemployment was the worst in 2 years.

“The observable decline of social indicators reflects the public’s reaction to the notable fuel price increase and the impending unpopular pension reform,” explained Yulia Baskakova, head of social modeling and prediction at the Russian Public Opinion Research Center.

The survey carried out by the center painted a similar picture: 25% of Russians assessed their own financial standing as “bad” or “very bad”, and 26% indicated that they expect it to deteriorate further. Both indicators are records and exceed the values from the 2014 crisis.

Under these circumstances, the expert says that most notable drop is in the area of expectations: “Many assume that in the near future their financial standing will worsen. The prospect of belt-tightening does not look bright”.

  Russia, ruble, Central Bank of Russia