Russian ruble plunges as economy hit hard by falling oil prices, sanctions

The Globe and Mail ^ | 12/02/2014 | Brian Milner

[Agog]

Russia’s central bank is trying to resist a brutal assault on the ruble, but any respite is bound to be short-lived.

The Central Bank of Russia waded into currency markets Monday as the ruble plunged to levels not seen since the 1998 financial crisis that triggered a devaluation and government debt default.

Like the Canadian dollar and the Norwegian krone, the Russian currency has been under extreme pressure amid the collapse in oil prices.

The ruble plunged as much as 6.5 per cent Monday, hitting a record low against the U.S. dollar before retracing some its lost ground to close down 4 per cent, which traders attributed to central bank intervention. The ruble has lost close to 60 per cent of its value against the greenback so far this year.

Several have called for an investigation of the bank’s manoeuvres and are urging more aggressive use of foreign-exchange reserves to prop up the ruble. ...............

Central bank reserves total what appear to be a comfortable $420-billion. But that’s down more than $100-billion in just one year and will probably shrink by a similar amount in the coming year. What’s more, $172-billion of the total is controlled by the Finance Ministry, another $45-billion or so sits in gold and $12-billion is parked with the International Monetary Fund. Another $150-billion is likely to be needed to cover foreign debt repayments over the next year, because the country has been cut off from normal U.S.-dollar refinancing channels by the sanctions.

[Agog]

There has been much press lately that Putin's understanding of economics is Soviet in its sophistication and that he is ill equipped to deal with the current situation confronting Russia.

[Toddsterpatriot]

The ruble has lost close to 60 per cent of its value against the greenback so far this year.

Thugin' don't pay like it used to, eh comrade?

[PoloSec]

I will be looking for obama to ease sanctions, I don’t think he expected it to actually work.

[FreeReign]

Russian ruble plunges as economy hit hard by falling oil prices, sanctions

Putin takes his shirt off. Then he loses it.

[JRandomFreeper]

My daughter is a fan of real Russian Potato vodka, so I let her know the ruble has fallen.

She can stock up and given her consumption rate, she should have real Russian vodka still when 2050 rolls around.

/johnny

[roadcat]

There has been much press lately that Putin's understanding of economics is Soviet in its sophistication and that he is ill equipped to deal with the current situation confronting Russia.

He should take some lessons from us. Cash-for-clunkers, huge investments in solar panels, and other schemes that "saved" our economy. Yep, that's the ticket. The Russian economy would rebound quickly.

[Krosan]

Russian economy is much simpler. When oil prices are high they have money and invade their neigbours. When oil prices go down they starve.

[roadcat]

Russian economy is much simpler.

I hear ya. They also have diamonds, other minerals, etc. I just think we should help them fall apart faster by having them adopt Obama style economic stimulus incentives, throw their money away faster. See who could spend their money to the bottom the fastest.