Russian Ruble Continues to Fall
The Russian ruble is falling under the pressure of cheaper oil, reviving concerns over the country’s economic outlook, particularly the perniciously high inflation rate.
The ruble was down by 0.9 percent in Moscow trading today, at 59.2 rubles against the US dollar.
The decline comes a day after the Russian central bank halted daily purchases of foreign currency in an attempt to stop a week-long slide in the currency. The ruble on Tuesday hit 60 rubles to the dollar, its lowest point in more than four months.
A weaker ruble threatens the government’s plans to stem inflation, which was 15 percent in June.
The central bank was buying foreign currency on the market to build up its international reserves it needs for bond repayments. But those purchases also help weaken the ruble, so the recent days’ drop has forced the central bank to halt them.
An “excessive” drop in the ruble would not be politically palatable, analysts from the Moscow-based investment bank Sberbank CIB said in a morning note to investors. They added that the goal of rebuilding foreign currency reserves is “not compatible” with the aim of a stronger and more stable ruble.
The investment bank UralSib said that since the central bank started buying foreign currency worth US$200 million a day in mid-May the ruble has lost more than 15 percent against the dollar.
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