The ruble has fallen since the start of the week after the central bank halted all currency purchases for the rest of the year, but it continues to be battered—and resources to prevent another fall are running out.
On Friday, the central bank set the official rate at 108 to the US dollar. While that’s an improvement from Wednesday’s rate of 114 on the local market, that still means one ruble is worth less than a penny.
The ruble has fallen 9% against the dollar since November 21, when the US sanctioned some 50 Russian banks, including Gazprombank, which emerged as Russia’s top asset in financial markets. And for the year to date, the ruble has fallen about 20% against the greenback.
While this may increase Russian exports by making them cheaper, it may increase inflation by making exports more expensive. Although the West has largely suspended trade with Russia, Chinese imports have replaced many imports, and the ruble has fallen below the yuan again.
During the summer, Russian businesses and banks had already suffered from a shortage of the yuan, which is the country’s most traded foreign currency and an important form of economic activity.
Meanwhile, Russia’s sovereign wealth fund has repeatedly pledged to support the ruble, leaving the Kremlin with little firepower against another currency collapse.
Before the latest crash, liquid assets in the National Wealth Fund were $55 billion as of last month, according to Bloomberg. That’s down from $400 billion before Russia invaded Ukraine in 2022.
Russia may continue to earn foreign currency by selling its oil and gas, but its shrinking economy leaves Moscow at the mercy of energy prices, which have been falling amid a slump in global demand.
The central bank could also raise interest rates to fight flaring inflation while also creating more demand for ruble-denominated assets. But prices are already at a ceiling-high 21%, meaning that the increase would tighten the screws even more on the Russian economy.
On Friday, the central bank said no urgent measures were needed to support the ruble, after President Vladimir Putin said on Thursday that the situation was under control.
Russia’s financial crisis is coming as political analysts have long predicted that the country’s economy will no longer be able to sustain Putin’s war on Ukraine next year. For example, Russian factories cannot produce the weapons systems necessary to compensate for battlefield losses, and old Soviet stockpiles are running out.
This story was originally posted on Fortune.com