Central Bank Tested as Ruble Falls to Record Lows
Published: February 20, 2014 (Issue # 1798)
The Russian ruble continued to slide Wednesday, reaching a historic minimum against the euro as its fall brought the central bank close to the point where it would be committed to unlimited interventions to prop up the currency.
The euro climbed to more than 49 rubles Wednesday, while the dollar rose to 35.76 rubles, its highest level against the ruble since March 2009, according to data from the Moscow Exchange.
Related: Why the Ruble Is Sinking
The value of the euro-dollar basket, the benchmark used by the central bank, reached 41.8 rubles in afternoon trading, close to the upper limit of the ruble corridor set by the regulator.
If the ruble strays outside of the corridor, the central bank has said it will conduct unlimited interventions to bring the currency back within its target range.
The ruble has been one of the fastest fallers amid 2014 emerging market currency declines. This year alone the Russian currency has lost over 6 percent of its value against the euro-dollar basket.
Related: Economist Advises Russians to Dump Ruble, Buy Hard Currency
Russian officials have denied that the authorities are deliberately allowing the ruble to weaken in order to raise export revenue and stimulate the country’s flagging economy.
Unlike central banks in other emerging markets, the Russian regulator has not raised rates in an attempt to stem the ruble’s slide.
In an apparent attempt to balance the dual challenges of stubbornly high inflation and stagnant economic growth, the central bank kept interest rates on hold following its policy meeting last week.