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    RUSSIAN CURRENCY - Destination Russia

Russian Currency

RUBLE is the Old Russian payment and monetary unit, this coin was existing in ancient times, in middle centuries, in USSR, RSFSR, in Russia and Belorussia. In ancient times it had few names: ruble, ruble tselkovyi, tselkovyi. In accordance with historical sources word �Ruble� appeared in Novgorod, in XIII century and first meant a name of Novgorod Grivna (grivna looks like a bar of silver).

Ruble was used as payment facility since the middle of XV century. Weight of grivna was equal to common weight standard of that period - grivna or grivenka had to be equal to 204 gram, and 200 coins (deneg or rubles) was produced from each Grivna. Simply, each bar of silver (grivna) was cut from end to equal pieces (please look at the picture below). Ruble as a mean of payment was known in neighboring countries quite well. So, historians says that before 1413 Belorussian Ruble was equal to 100 Prague groshes (coins), in XVI-XVIII century - to 100 Lithuanian groshes (coins) or 125 Poland groshes.

Ruble was used as payment facility since the middle of XV century. Weight of grivna was equal to common weight standard of that period - grivna or grivenka had to be equal to 204 gram, and 200 coins (deneg or rubles) was produced from each Grivna. Simply, each bar of silver (grivna) was cut from end to equal pieces. Ruble as a mean of payment was known in neighboring countries quite well. So, historians says that before 1413 Belorussian Ruble was equal to 100 Prague groshes (coins), in XVI-XVIII century - to 100 Lithuanian groshes (coins) or 125 Poland groshes.

Being deviled to the coins Ruble was able to be a mean of payment for small daily payment needs. But this broke its� stability, because weight of coins reduced little by little. As a result ruble was not a bar of silver any more and became just a word meaning money. Since that time weight of some certain quantity of silver coins was going down (before 1534 it was 200 coins, and later it became 100 kopecks). After currency reform of 1534 all cash system was unified and ruble remained a monetary unit, but it content already 100 kopecks, what served as a basis of future Russian monetary ten-base system

Monetary system of this period still was based on a weight of precious metals, mainly silver and copper. In 1534 weight of 100 kopecks was equal to 68 gram, but in the beginning of XVII century it came down to 46 gram, what was connected with non-stable political and economical situation. In 1654 under the governing of Tsar Aleksei Mikhailivich the real silver coins were circulating; these money were re-coined from tallers, which were exported from small town - Iohimstalle (now Chech Republic), because these silver tallers were known very well in all Europe as top quality coins. These re-coined tallers were called as rubles (coin had a sign on it - �Ruble�). But at that time the ruble was not a full-weight coin, because content of silver was less that in 100 silver kopecks; in fact, real cost of the ruble was 64 kopecks.

In 1648 purchase of silver was monopolized by the state, all private deals were forbidden. Coin production was admitted in Moscow only, all other towns were forbidden to produce money (before that time other towns and private persons could produce coins from theirs own metal, but they had to pay a special tax to the state).
In 1655 the government decided to stop issuance of defective rubles and continued to coin silver kopecks of the previous century.

Increase of commodity production gave very important meaning to currency circulation problem. New currency reform of Peter the Great reduced content of precious metal in the coins, therefore ordinary ruble of 1698 had around 1/3 value of the Ruble of Ivan the Third. Carrying on numerous of wars he had to decrease real cost of the coin and increase profit. Government put a lot of efforts to find new gold, silver and copper fields. Few laws forbid export of gold and silver. Peter I not only refused to export Russian money abroad, but forbid to sell Russian goods for Russian money to foreign merchants, as he was afraid of import of false money. But Peter the Great called money as �artery of war�, therefore he put a lot of efforts to keep the situation under control. New reform of the beginning of XVIII accepted ten-base system as a basis of monetary system and Russia was the first in the world. In accordance with this system one ruble was divided up to 100 kopecks. From 1704 rubles of 28 gram weight were issued regularly (equal to the weight of west-European taller as well as 100 silver kopecks).

During the governing of Elizaveta Petrovna (from 1741 to 1761) General-berg-Director B.Minih offered a plan of improvements of state finances, based on paper money emission. This offer had many objections from Senate, and during Peter III (who was the next Tsar) period only, the government tried to issue banknote to cover deficit of the budget. On 25 of May 1762 it was announced that the first bank in the country has the right to issue banknotes, the Decree was signed by Peter III, but this deal was not completed due to palace revolution. In XVIII stock exchange fluctuations of copper coin became a real trouble for Russian economics, even it was more hard due to copper coin was the only mean of payment. From 1730 to 1800 appearance of copper coins was changed seven times. Copper coins using was especially difficult for internal cash payments and commodity turn-over, because it was necessary to arrange transportation and security to bring big amounts in copper coins within big Russian territory.

Economic development required more portable and convenient payment facilities. After 6 years the government came back to the idea about paper money, before this time the copper coins were used as a mean of payment. Immediate war forced the government to start issuance of banknotes. Ekaterina the Second proved necessity of such a step in Manifest from 29 December, 1768. Therefore she decided to establish the first Appropriate Funds Bank; in 1769 first paper money - �assignations� (or assignatsii) were issued. Before assignation veksel (bill of exchange) was used as securities, so, holders of these bills of exchange were able to receive back an amount, mentioned in the bill. Two banks - in Moscow and Saint-Petersburg, were established to support paper money. But these money were supported by copper, therefore these banknotes were just substitute of copper coins. Before emission did not exceed 100 millions of rubles (this amount was determined and proved by �holy Tsar word�) these rubles were valuable money. But in 1786 �holy Tsar word� was broken and issuance of assignations exceeded the amount of 100 millions, and printing machine worked non-stop. Russia was in need of money. The country had active internal policy, and had huge expenses due to Russian-Turkish wars. Issuance of assignations, which were not supported properly, brought to fall of value. In 1760 assignation-ruble was equal to 99 kopecks, in 1799 ruble fall down to 66,5 kopecks. Assignations of first standard were in use since 1769 till 1786.

Appearance of metal coins was changed since Tsar Pavel I, golden and silver coins had no Imperators portrait at the obverse, it was replaced by monogram. Coins appearance was very formal and had the information on nominal, place and time of coin. Golden coins of the next Imperator, Alexander I had the information on gold content; silver coins, accordingly content of silver. In 1810 Alexander I issued the Manifest where Imperator stated that all assignations issued in previous years become a debt of the state, and will be ensured by all property of Russian Empire. Also it was stated that issuance of assignations is stopped and this debt will be reimbursed. This document set up a silver ruble as a common mean of payment, content of silver in the coin was four zlotniks (18 gram). It was announced that golden and silver coins would be produced from golden and silver bars.

The Great Patriotic war of 1812 with Napoleon I required huge amounts of money. After the war rate of paper assignation fall down to 20 kopecks of silver to 1 assignation ruble. Since 1817 the Government began to withdraw assignations to improve the rate. Currency reform of 1839 replaced assignations by credit notes. Purpose of this reform was to set up silver mono-metal circulation together with strengthening of banknote. At that moment Russia achieved good payment balance due to big export operations. Credit notes were changed as 1 credit note to 3,5 assignations. Crimean war again undermined Russian economics, making big budget deficit. In 1859 rate of credit ruble to gold was 83,5 kopecks, in 1865 in was 81,6, in 1866 - 76,4 kopecks. Money circulation had inflationary bias. From 1867 the government started to accumulate golden stock, accepting coins (foreign as well) and giving credit notes.

At the end of XIX century great golden mono-metal period came, economics was stabilized, foreign capitals was invested. Gold stock of Russia was increased in 4 times, golden coin was a mean of payment, but this period was short. Due to Russian-Japan war of 1895-1897 and following revolution of 1905-1907 this stability was destroyed at all.

In the beginning of the First World War golden, silver and copper coins evanesce and paper money accepted for circulation. Cost of paper Ruble fell down very much. Inflation, then hyper-inflation periods brought to October Social Revolution of 1917. This situation stayed for quite long period of time. Real cost of ruble was 6-7 kopecks (for example box of matches costs around two millions Rubles).

Succeeding denomination in million times could not improve the situation. Soviet government had to issue banknotes to cover military expenses and keep old banknotes in circulation, therefore inflation continued. Currency reform of 1922-1924 stabilized new Soviet Ruble. New currency unit - Chervonets was printed. Chervonets had golden content - 7, 73234, what was equal to previous golden coin of 10 rubles (chervonets means ten), and was supported by all government value. In 1923 it occupies a fitting place in currency circulation of the country. Some period of time government had been issuing chervontsy, which used for foreign payments, and this fact played a role for Soviet money.

Life of chervonets was not long. Later ruble became main currency unit again. But the word �chervonets� exist till new currency reform of 1947. At the final stage of the reform the government started to coin silver coins of 1 Ruble, 50, 20, 15, 10 kopecks and copper coins of 5,3,2,1. These coins were made in accordance with standards (form, weight and content) of pre-revolutionary coins, but Soviet coins had State Soviet Emblem and words �Proletarians of all countries, unite!� at the right side. During Soviet period and socialist currency reforms all monetary system was changed few times. In 1935 one ruble contents of 0,167674 of gold, and from 1937 exchange rate was determined on US dollar basis; 1 US Dollar was equal to 5 Rubles and 30 kopecks. This correlation was kept till 1950.

After the Great Patriotic War whole country was fully destroyed, population and government had to put incredible efforts to build up the country again. During the Second World War (Great Patriotic War) quantity of banknotes exceeded turnover circulation needs, what entailed reduction of purchase ability of the Ruble. Currency reform of 1947 created good terms for further stabilization of monetary system and currency. Old banknotes were changed to new ones, in correlation 10 to1; theirs nominal was determined in Rubles. Post-war decrease of prices for most fast-running customer goods brought to increase of purchasing power of Ruble, accordingly it�s exchange rate to foreign currency rose up. In 1950 Ruble exchange rate was moved from dollar base to gold base (golden content was 0,222168 gram of fine gold). US Dollar was equate to 4 Rubles. In the time of communism construction absolute stability of ruble supported economic grow. Commodity circulation and production volume achieved such a big level that previous pricing policy could not satisfy the new terms. In 1961 new currency reform was undertaken again, old banknotes were changed to the new ones in 10 to 1 correlation. From one side it looked like simple replacing of banknotes, but at the same time it was hidden inflation. New ruble was supported properly, golden content of ruble was increased, and one ruble had 0,987412 gram of fine gold, so, US Dollar became equal to 90 kopecks. Due to devaluation of US Dollar in 1973 Ruble became 75 kopecks. Role of ruble as a mean of payment on international socialist countries of market continuously grew up till USSR collapse.

Post-USSR history of ruble is quite sorrowful. In accordance with official statistics information, falling down of internal gross product from 1990 to 1995 was more than 50%.

The modern Russian ruble appeared in 1992, when the former USSR had been finally
splitting into 15 independent countries. During a period of high inflation there were different issues of banknotes in 1992, 1993, 1994 and 1995. Beginning of 1998 a monetary reform took place, new ruble replaced old once at 1:1000 rate. In 2001 the modified banknotes of 1997 were introduced, with improved security features. 1 ruble equal to 100 kopecks.

A decade after the implosion of the Soviet Union in December 1991, Russia is still struggling to establish a modern market economy and achieve strong economic growth. In contrast to its trading and former political partners in Central Europe - which were able to overcome the initial production declines that accompanied the launch of market reforms within three to five years, Russia saw its economy contrast for five years, as the executive and legislative base dithered over the implementation of many of the basic foundations of a market economy. Russia achieved a slight recovery in 1997, but the government�s stubborn budget deficits and country�s poor business climate made it vulnerable when the global financial crisis swept through in 1998. The crisis culminated in the August depreciation of the ruble, a debt default by the government, and a sharp deterioration in living standards for most of the population. The economy subsequently has rebounded, growing by an average of more that 6% annually in 1999-2001 on the back of higher oil prices and weak ruble. This recovery, along with a renewed government effort in 2000 and 2001 to advance lagging structural reforms, have raised business and investor confidence over Russia�s prospects in its� second decade of transition. Yet serious problem persist Russia remains heavily dependent on exports of commodities, particularly oil, natural gas, metals and timber, which account for over 80% of exports, leaving the country vulnerable to swings in world prices. Russia�s industrial base is increasingly dilapidated and must be replaced or modernized if the country is to achieve sustainable economic growth. Other problems include widespread corruption, lack of strong legal system, capital flight and brain drain. Since President Putin was elected to his post,, a lot of positive changes happened with the Ruble. As an example please find below dynamic of exchange rate in 2002.

The exchange rate of ruble to US Dollar is approximately 31,85 rubles for $1. The rate is set by the Central Bank of Russia and usually changed a little bit every day. You can easily change currency at any commercial bank or other exchange office.

The following coins and banknotes are in use in Russia today:

1000, 500, 100, 50, and 10 ruble notes
5, 2, and 1 ruble coins
50, 10, 5, and 1 kopeck coins

Comparative table of Ruble/US Dollar exchange rate
Year Ruble/per Dollar

1937 5 rubles 30 kopecks
1950 4 Rubles
1961 90 kopecks
1973 75 kopecks
1985 97 kopecks
1997 5,785 rubles
Before August,1998 6 rubles
After August, 1998 25 rubles
2000 28 rubles 15 kopecks
2002 31 rubles, 85 kopecks

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