Winter is proving tough for Russia with currency rollercoaster ride

Winter is proving tough for Russia with currency rollercoaster ride

Russia's chaotic currency situation has led General Motors to temporarily suspend wholesaling of vehicles to dealers.

The rollercoaster rouble ride has seen wild fluctuations in the exchange rate, leading to huge economic uncertainty and lack of confidence in Russia.

"In view of the volatility of [the] rouble exchange rate and with the aim to manage its business risk, GM Russia has decided to temporarily suspend wholesaling of vehicles to its dealers in Russia as of 16 December, 2014," said a GM Europe statement emailed to just-auto.

"At the same time we confirm all Cadillac, Opel and Chevrolet vehicles already purchased by customers will be delivered on the agreed price.

"We are monitoring the situation."

Plummeting oil prices which have seen costs per barrel dip below even $60, coupled with major Western concerns surrounding Russia's annexation of Crimea and alleged involvement in Eastern Ukraine, have combined to send huge jitters spiralling through the Kremlin's economic policy.

Despite the significant uncertainty however, Russian President Vladimir Putin today (18 December), struck a defiant note at his annual News Conference in Moscow, although conceding some cuts might have to be made "in case of unfavourable developments."

Putin is placing his trust in a global economic recovery, albeit at lower rates and one that could take up to two years, but which would require increased energy, a commoditity Russia possesses in abundance.

"Could oil prices continue falling and would this influence our national currency and consequently all the other economic indexes, including inflation?" said Putin. "Yes, this is possible."

"A growing world economy will require additional energy resources. However, by that time I have no doubt we will be able to do a great deal to diversify our economy, because life itself will force us to do it. There is no other way we could function."

"Therefore, overall, I repeat, we will undoubtedly comply with all our social commitments using the existing reserves. Fortunately, this year they have even grown.

"I would like to remind you Central Bank reserves amount to US$419bn. The Central Bank does not intend to ‘burn' them all senselessly, which is right."