Dec 1, 2014 5:03 AM
Russian ruble takes a nosedive as oil price drops
The Associated Press
MOSCOW (AP) Russia's ruble hit a new all-time low on Monday, dropping about 5 percent as declining oil prices and the conflict in eastern Ukraine weigh on the country's economic prospects.
The Russian currency traded at 52.75 rubles against the dollar in morning trading Monday after shedding 15 percent in the previous week. The ruble was also down 5 percent against the euro.
Battered by low oil prices and the conflict in eastern Ukraine, the ruble has been declining throughout the year, losing about 42 percent of this value since January.
The Kremlin, which in the past supported the exchange rate by buying up the rubles, says it considers the pressure on the currency to be speculative and is happy for it to remain freely floated in markets.
The price of oil, the backbone of the Russian economy, has dropped roughly 25 percent since the summer. Brent crude, an international benchmark, fell 3 percent on Friday and was down another 1 percent on Monday to $69.47 a barrel.
The recent slide follows OPEC's decision last week to leave its production target unchanged. Member nations of the cartel are worried they'll lose market share if they lower production, which could have helped to push up the price.
"In the short term, the Russian market is a victim of OPEC's apparent decision to reduce the volume of high-cost production through lower prices," Moscow-based investment bank Sberbank CIB said in a morning note. "The market and the ruble will not stabilize until oil does."
Russian monetary officials sought to assuage fears of a ruble free fall.
Ksenia Yudayeva, deputy chairman of the Russian Central Bank, told Russian news agencies on Monday there is enough currency liquidity in the market and that the Central Bank has prepared new economic forecasts based on a price of $60 per barrel.