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Ruble Extends Slide, Reviving Economic Concerns

  • Associated Press

FILE - An employee counts Russian ruble bank notes at a private company's office in Krasnoyarsk, Siberia, Dec. 17, 2014.

FILE - An employee counts Russian ruble bank notes at a private company's office in Krasnoyarsk, Siberia, Dec. 17, 2014.

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 0.9 percent in Moscow trading on Thursday, at 59.2 rubles against the 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 national currency. The ruble on Tuesday hit 60 rubles to the dollar, its lowest point in more than four months.

Slump in oil prices

The currency took a battering in 2014 because of a slump in global prices for oil — the country's biggest source of revenue — and recovered somewhat early this year before falling again. A weaker ruble threatens the government's plans to curb 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 Thursday that since the central bank started buying foreign currency worth $200 million a day in mid-May the ruble has lost more than 15 percent against the dollar.

The fates of the Russian economy and currency are closely linked to the price of oil, but have also been affected by Western economic sanctions on Russia over its role in the Ukraine conflict.

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