Russia is facing potential large-scale devaluation as forecasts predict the dollar could surpass 100 rubles by winter and reach 130 rubles long-term. Devaluation weakens the national currency against stable currencies, making imports more expensive and decreasing the international value of ruble savings.

Several factors are contributing to the increasing pressure on the ruble, including low Urals oil prices, high inflation exceeding the 4% target, geopolitical uncertainty, and potential normalization of the Central Bank’s key rate. Authorities may allow the ruble to weaken to 95-100 per dollar to maintain budget stability and support exporters, representing a managed devaluation scenario.

Devaluation poses several dangers to the economy. Imports become more expensive, affecting everything from medicine and car parts to coffee beans and smartphones. Ruble savings lose value, impacting those saving for major goals like education or retirement. Foreign currency debts become more burdensome, as monthly payments increase significantly. Devaluation also fuels inflation, pushing up prices for both imported and locally produced goods. Finally, uncertainty deters investors, slowing down economic development and reducing the overall standard of living.

Exporters benefit from devaluation as they receive more rubles for their foreign currency earnings. However, the general population loses out as their purchasing power decreases compared to benchmark economies. While a slight deflation can stimulate economic turnover by making export-oriented enterprises more competitive, a strong devaluation can shock the economy, destroy incentives for domestic production, cheapen assets, and increase poverty.