Russian rouble does not trust the government
ukraine
russia-economy
The rouble’s 2.5% drop right after official reassurances shows how little credibility the Russian government carries with markets.
Macroeconomic stability rests on public trust in government, and the rouble’s behaviour is a live gauge of how little Russians extend to theirs: it fell 2.5% immediately after official statements meant to project economic confidence. A government seen as well-behaved and benevolent earns a form of soft power that stabilises its currency even through shocks; the Russian government’s credibility deficit means it can’t draw on that cushion, however sound the underlying macro fundamentals look on paper.
Originally published on Substack, July 7, 2023.