ECO102 Assignment 6
Jiaqi An 1008531368
1. The exchange rate for the Russian ruble versus the Euro is decreasing over the last
year. The exchange rate for the Russian ruble versus the USD fluctuated over the last
year. The exchange rate for the Russian ruble versus the Canadian dollar is increasing,
then decreasing in 2021 December and increasing in 2022. Using the RUBEUR to
observe, we can see that the value of the ruble decreased a lot between 2022.2.1 and
2022.3.9. However, the value of the ruble increased after that. Presently, the exchange
rate decreased by about 0.001 compared to the rate in 2022.2.1.
2. The inflation rate of Canada increases by 0.6%. The inflation rate of Russia increases
by 0.44%. The inflation rate of the Euro Area increases by 1.6%. The inflation rate of
the USA increases by 0.4%. The inflation in Russia is smaller than the rate in Canada
and Europe, which means rubles will be appreciating.
3. The change in the exchange rate means that the value of the ruble increases a lot after
decreasing a lot. At the beginning of the fight, the USA announces to punish Russia
and that’s why the value of the ruble drops. However, Russia has the supply of natural
gas and it must be exchanged by ruble, which increases the ruble’s value. At the same
time, the industry in Russia wants to execute capital flight to remove their assets to
foreign because of the threats of western countries. Russia publishes some policies to
control the loss of capital due to conflict, and at the same time cracked down on those
enterprises that have illicit relations with other countries. The policies warn Russian
businesses that regulation of state unrest will only become stricter.
4. The value of the ruble may go up because it must be paid by the ruble. Russia controls
the natural gas and it’s a kind of pressure to western countries. Russia uses this policy
to support the ruble and fight against other countries. However, lots of countries’
natural gas is from Russia. They must buy from Russia and that’s why the value of
ruble will increase.