Ruble Continues Fall, Lowest Level Since 2009
Published: January 28, 2014 (Issue # 1794)
The ruble continued its fall in Monday morning trading, reaching a historic low of 47.5 rubles to the euro.
The currency is now at its lowest level against the dollar since March 2009, when it plummeted on fears of a deepening recession in the country.
On Friday, the country’s central bank widened the trading corridor against the euro-dollar basket amid a slide in the ruble of over 3.5 percent since the beginning of the year. The new limit was surpassed Monday morning.
Russia measures the ruble’s performance against a weighted basket of 55 percent dollars and 45 percent euros.
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The central bank, which controls the value of the ruble through interventions on the currency market, has repeatedly widened the target trading band for the ruble in recent months.
A weaker ruble means larger profits for Russian exporters and a windfall for the state budget, which is dependent on revenue from commodity exports.
Economic Development Minister Alexei Ulyukayev said Monday that a natural weakening of the ruble could boost the economy by increasing the competitiveness of Russian businesses, but added that he was opposed to an artificial depreciation.
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Experts have suggested that the bank may be forced to modify its methods of maintaining the corridor, but doing so now might prompt a further fall in the currency.
The central bank is planning to move toward a free floating ruble by the end of this year.
The central bank’s intervention in trading to prop up the ruble has more than doubled in the last week to about $400 million per day.