THE plummeting value of Russia’s currency is set to have a knock on effect on fragile EU economies.
The Russian rouble has halved in value on foreign exchange markets over the last 12 months.
And with a large number of Russians living and investing in Spain – and other European countries – the impact on the country’s economy could be sizeable.
Carl Weinberg, chief economist at High Frequency Economies, referred to the currency’s collapse as an ‘unrecoverable spiral’ which is set to get worse.
He said the collapse was brought on by both ‘economic factors’ like sanctions and falling oil prices and ‘financial factors’ as the Russian Central Bank continues to print money to help state-owned companies cover their debts.
He anticipates that EU markets will falter in the upcoming months as trade in and out of Russia will inevitably become less profitable.
The currency crash is also set to reduce the number of Russian tourists flying into Europe as the cost of living rises for Russia’s residents.
To make matters worse, Russia’s companies, both private and state-owned, owe €540 billion in foreign currencies to offshore investors.
This will spell bad news for banks and investors across Europe as Russian companies will inevitably need longer to repay their debts.