Russian Ruble Drops on Fears of Stagflation

The Russian ruble dropped today on concerns about so-called stagflation that threatens the nation’s economy and makes it less attractive for overseas investors.
Usually, high inflation is accompanied by strong economic growth, while slow growth means weak inflation. Yet in case of stagflation high inflation is combined with slow economic expansion and high unemployment. Such state is very hard for policy makers to deal with as conventional measures will improve one part of equation, worsening other part at the same time.
The problems of the Russian economy are caused by various reasons, including falling prices for crude oil. The ruble may get some support from tax inflows this month, but the overall environment is detrimental for the currency.
USD/RUB was up from 33.3939 to 33.4170 and EUR/RUB advanced from 45.4005 to 45.4800 as of 19:22 GMT today.

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