Many of you have likely noticed that the Russian ruble has been in the news lately. The ruble decreased in value by 11 percent against the U.S. dollar on Monday, 15 December. In a matter of weeks it has dropped over 40 percent. According to the Moscow Times on Monday, the ruble is the world’s worst-performing currency and Monday’s steep drop was the worst since 1998 when Russia had to default on most of its debt. As you read further, please keep in mind that I am not an economist – far from it – and I am taking a very complex situation and simplifying it.

The ruble has been the official currency of Russia longer that Vladimir Putin has been president – much longer. In fact, the ruble has been around for nearly 500 years. The ruble has been divided up into 100 kopeks since the early 1700’s – much the same way that the dollar is divided up into 100 cents or pennies. Ironically, the word “ruble” is derived from a Russian verb meaning to “chop.” As of late, that’s what has been happening to its value.

There are several possible reasons for the ruble’s trouble and here are a few of the main ones. Part of the reason that the ruble has been shrinking in value has been the decrease in oil prices which have dropped from nearly $115 per barrel in June to around $60 now. Russia has also seen a stagnate economy with virtually no economic growth in quite a while. You also may have heard about the sanctions imposed by the EU and the U.S. as a result of the situation in Ukraine. There are likely more sanctions on the way but the ones already imposed have made access to foreign capital nearly impossible.

What does this all mean for Russian people? It means inflation, which is already high compared to the U.S., will likely increase. In the U.S. inflation is under two percent, in Russia it is projected to go up near ten percent according to government estimates. Last year, inflation was around 6.5 percent. Higher inflation has already sent the price of food and other goods upward. So much of what you see in Russia is imported from other countries. As the value of the ruble goes down, fewer people are going to be able to afford to buy things from America, the EU, or even China.

Some may blame Putin for this, some will blame the members of the EU and the Americans, and some will blame OPEC for the declining price of oil. It doesn’t matter who we place the blame with as much as it matters who is getting hurt by this: the Russian population. You can imagine just how scary this is for those living in Russia – especially those on fixed incomes. For one U.S. dollar you can get nearly 65 rubles – this could be good news if you are visiting Russia and exchanging dollars for rubles. However, for those of us who have family in Russia, this news is anything but good. It has also been speculated that a ruined Russian economy will have ripples felt in other countries.