Moscow – (AFP)
The beleaguered ruble on Monday recorded its biggest one-day fall since the financial meltdown of 1998 after oil prices sank further amid spreading worries about Russia’s economy.
The Russian currency’s fall — for a third day in a row — saw it slump at one point by more than eight percent, to over 53 rubles against the dollar and 67 rubles against the euro in afternoon trading.
The currency then clawed back a little ground to 52 rubles against the dollar and 65 against the euro.
The ruble has now depreciated by some 40 percent against the dollar this year, due to collapsing oil prices and Western sanctions imposed against Russia’s support for a separatist uprising in eastern Ukraine.
According to a new study by the polling company Public Opinion, 50 percent of Russians said the falling ruble was having an impact on their lives.
“This is shock and horror,” Elina Drozdova, a 39-year-old mother of two, told AFP, referring to the plumetting currency. “The first thought is, ‘goodbye summer vacations’.”
“Our lives are becoming expensive directly in proportion to the rise of the dollar and euro,” she said.
Brent crude was down to $68.39 on Monday morning, a five-year low, following a decision by OPEC last week to leave its output target unchanged.
“Brent’s moving below $70 (-2.7% overnight) has triggered the rout, as consensus seems to hold that the oil price drop will persist over an extended period,” Alfa Bank said in a note.
The central bank had propped up the falling ruble through daily interventions until November, when it said it would limit its support and let the ruble float freely.
The plumetting currency has renewed pressure on the central bank to intervene.
“I personally believe that the situation in which the exchange rate grows from 44.50 to 52.50 (eight rubles, or 18 percent) in five days is a situation of financial instability,” said Sergey Romanchuk, the head of currency dealing at Metallinvestbank.
“The Central Bank MUST mitigate volatility on the currency market,” he said on Facebook.
The country is expected to record capital outflows of $130 billion as Russians hedge against the falling ruble by converting their ruble savings to foreign currency.
Finance Minister Anton Siluanov said last week that Russia was losing up to $140 billion (112 billion euros) a year because of Western sanctions over the Ukraine conflict.
President Vladimir Putin has brushed off concerns, saying the economic damage was “not fatal”.
In a fresh sign that the Kremlin was girding itself for a protracted battle with the West, Putin’s chief-of-staff urged officials to put together plans to replace imports across all industries.
“I believe that such work should begin immediately,” Sergei Ivanov told officials in comments released by the Kremlin.