Customers shop for milk and dairy items inside an Auchan Retail International SA hypermarket in Moscow, Russia, on Monday, Jan. 31, 2022. Inflation has remained more than twice the the Bank of Russia's 4% target, despite rate hikes totaling 425 basis points in 2021. Photographer: Andrey Rudakov/Bloomberg via Getty Images Customers shop for milk and dairy items inside an Auchan Retail International hypermarket in Moscow, Russia. Bloomberg | Bloomberg | Getty Images Weak ruble While Russia has looked to evade the pain of sanctions with import substitution and oil and gas exports to countries willing to accept them, international penalties are hurting. The Russian ruble fell sharply against the dollar in November, weakening to 114 against the greenback — its lowest level since March 2022 — after another round of U.S. sanctions targeted Russia’s third-largest bank Gazprombank. The measures are aimed at preventing the bank — which the U.S. Treasury said acts as a conduit for Russia to purchase military materials and pay Russian soldiers — from handling any energy-related transactions that involve the U.S. financial system. Russian conscripts called up for military service walk towards a bus before their departure for garrisons, in Bataysk in the Rostov region, Russia November 16, 2024. REUTERS/Sergey Pivovarov Russian conscripts called up for military service sit in a bus before their departure for garrisons, in Bataysk in the Rostov region, Russia November 16, 2024. Sergey Pivovarov | Reuters The ruble’s sharp move lower prompted the central bank to intervene to prop up the currency, with the CBR saying it would halt foreign purchases on the domestic currency market for the rest of the year “in order to reduce the volatility of financial markets.” Putin commented on the situation last month, insisting that the situation is under control. “There are absolutely no grounds for panic,” Putin told reporters, news agency RIA Novosti reported. hide content US Dollar / Russian Ruble FX Spot Rate RUB=:Exchange + View Quote Details 104.4955 quote price arrow down-0.50 (-0.4785%) Last | 1:12 PM EST As for the fluctuations in the ruble exchange rate, this is connected not only with inflation processes, it is also connected with payments to the budget, it is connected with oil prices. There are many factors of a seasonal nature,” he added, in comments translated by Google. The ruble has strengthened in recent weeks but remains down around 3% against the dollar over the past month. It was last trading at 103 against the greenback Monday. There’s little that Russia’s central bank can do to tackle inflation— and the ruble’s deterioration — while the war continues, according to analysts Alexandra Prokopenko and Alexander Kolyandr. “The fundamental reasons for the ruble’s weakness have not gone anywhere, and the dynamic of Russia’s trade flows means the currency is destined to falter and inflation to rise,” they noted in analysis for Carnegie Politika. “As the Russian economy slows despite significant state spending, the dynamics of the ruble exchange rate suggest the country is heading for stagflation (a toxic combination of slow growth and rising prices),” they said. “The root cause is the war and ensuing Western sanctions and militarization of Russia’s economy. The country’s financial authorities don’t have the power to solve this problem — and they’re even afraid to speak about