October 26: Mikhail Gorbachev signed a decree on the commercial exchange rate of the ruble.
President of the USSR Mikhail Gorbachev signed a decree "On the introduction of a commercial exchange rate for the ruble against foreign currencies." Businesses were allowed to buy and sell dollars.
They give us our salaries
In whole sacks,
And they give it at the exchange office
Dollar with fists.
Ruble exchange rate before 1990
The official exchange rate of the Soviet ruble to the US dollar was set back in 1924 at 2 rubles 22 kopecks. By the 1950s, the dollar had risen to 5 rubles, but after Khrushchev's monetary reform of 1961, it actually fell to 90 kopecks.
Over the next 30 years, Soviet money was worth more than American money and even strengthened: in 1985, the dollar was worth 75 kopecks; in 1990, it was worth 60 kopecks.
However, this official exchange rate had virtually no impact on the lives of Soviet citizens: it was still impossible to buy or sell foreign currency through banks. Meanwhile, the real value of a dollar on the black market could reach 6 rubles.
Gorbachev's decree and the commercial course
After Gorbachev's arrival, shifts toward economic reform began: the government abandoned its monopoly on foreign trade, enterprises were allowed to buy goods abroad and sell them within the USSR, and Vnesheconombank began holding the first foreign exchange auctions.
Gorbachev's decree, along with the official ruble exchange rate of 60 kopecks, established a commercial exchange rate: as of October 1990, it was three times higher (1,8 rubles per dollar). By 1991, it had already reached 30 rubles.
The emergence of a commercial exchange rate was explained simply: at the same time, the Kremlin issued a decree requiring exporters to sell 40% of their foreign exchange earnings to the state—this money was needed to pay off the USSR's external debt.
It was important that exporters not get too upset. It would have been a shame to sell [dollars] at 63 kopecks and receive fewer rubles than the dollars sold.
(journalist Sergei Minaev)
How Gorbachev's decree worked
A three-fold devaluation of the national currency was expected to stimulate demand in the domestic market. However, the commercial exchange rate of the ruble still proved out of touch with reality.
The crisis was more profound—there were no goods in the stores. We could change the exchange rate as much as we wanted, but until prices were liberalized, nothing could be done. But Gorbachev didn't do that.
(economist Evgeny Yasin)
The free exchange rate of the ruble, as well as the free sale of currency, emerged in 1992, when the official dollar exchange rate was equalized with the exchange rate, increasing it from 56 kopecks to 125 rubles.
Exchange rates were included in almost every news broadcast. Currency exchange was practically the only way for citizens to protect their wages from inflation. Carpets and crystal, as means of saving, were replaced by foreign currency deposits, real estate investments, and stock market speculation. People queued for hours to exchange currency, in the blazing sun, pouring rain, and freezing temperatures.
Currency exchange on the streets
Rubles were exchanged for dollars, and to buy groceries, dollars were exchanged back for rubles. Even within a day, the exchange rate could fluctuate significantly. "Money changers" operated on the streets, in buses, hotels, and cars.
I needed to change $500. I went to an unfamiliar place because the one I knew no longer had any. I decided to change $50 and fell for a well-known scam called "breakers." They started actively bending the bills in half, supposedly checking them. Suddenly, a man ran up and demanded that we leave quickly because trading was prohibited there. The man handed back the bill. It wasn't $50 anymore, but a single folded dollar.
(artist from St. Petersburg Nikolay Vasiliev)
In September 1993, the ruble-dollar exchange rate fell by 20%, from 1036 to 1299 rubles per dollar. A year later, in October 1994, it plunged by almost 40% (from 2833 to 3926 rubles per dollar). During the 1998 default, the dollar exchange rate more than tripled in a matter of weeks, from 6,5 to 20,83 denominated rubles.
In early 2014, before the annexation of Crimea, the dollar exchange rate was 32 rubles. Today, the dollar is worth over 80 rubles. In March 2022, it reached almost 134 rubles.
