Ruble rises slightly as oil prices continue decline

Posted On: December 24, 2014

The ruble rose 0.8 percent Wednesday to 54.10 per U.S. dollar, Bloomberg reported. Earlier in the trading session, it fell as much as 1.8 percent after Standard & Poor's noted on Tuesday that it may downgrade Russia's rating below investment grade in the next few months.

The yield on government bonds maturing in August 2023 rose 13 basis points to 13.57 percent, the publication noted. The continuing decline of Brent oil prices has pared Russia's foreign currency reserves, which have decreased $97 billion this year to a five-year low of $415 billion.

"The deterioration in Russia's terms of trade that has resulted from a lower price oil will have reduced the equilibrium level of the ruble substantially," John Higgins, the chief markets economist at Capital Economics, wrote in a note, according to CNBC. "Granted, the price of oil appears to be finding some support around $60 per barrel. But we don't expect it to rebound sharply."

Despite the difficult year for Russia's economy, CNBC reported that the central bank has made aggressive decisions to support the ruble, which has fallen 38 percent this year. The bank has been actively engaged in foreign exchange sales and recently increased interest rates to 17 percent.

Category: Industry News

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