Accessibility links

Breaking News

Russian Ruble Hits New Low Of 57 To Dollar

Residents are reflected in a shop window with logos of the euro, U.S. dollar, and ruble on bags inside, in central Moscow, on December 10.
Residents are reflected in a shop window with logos of the euro, U.S. dollar, and ruble on bags inside, in central Moscow, on December 10.

The Russian ruble fell below 57 to the dollar in trading on December 12, continuing a slide that has cut its value nearly in half this year.

The ruble's value against the dollar and the euro has continued to decline despite Russia's effort to shore it up by raising a key interest rate by one percentage point on December 11, the fifth increase this year.

The ruble was trading at about 57.31 to the dollar at midday on the Moscow exchange and later fell below 57.5.

One euro was buying more than 71 rubles.

The Russian central bank raised its key interest rate from 9.5 percent to 10.5 percent on December 11 -- and almost double the rate of 5.5 percent in March, when President Vladimir Putin set off a tense confrontation with the West by annexing Crimea from Ukraine.

The ruble and Russia's energy-reliant economy have been battered for months by falling world oil prices and sanctions imposed by the United States, the European Union, and other nations over Moscow's seizure of Crimea and its support for pro-Russian separatists fighting government forces in eastern Ukraine.

The central bank said it would continue to raise its key rate "in the case of further aggravation of inflation risks."

Andrei Klepach, deputy CEO of Russia's Vnesheconombank, said the rate hike was unlikely to help the ruble but would have "a negative impact on the economy."

Klepach said that "rates are already quite high and therefore one percentage point changes little."

Some investors said the central bank intervened on December 12 to avert a steeper decline.

Aleksei Vorobyov, head of the foreign-exchange-operations department at Vozrozhdenie bank in Moscow, said he believed the bank "went out to defend the 58-ruble mark" by selling hundreds of millions of dollars.

The central bank said it had conducted nearly $200 million worth of forex market interventions on December 10.

Russian share prices were also on the decline on December 12, with the RTS index falling more than 4 percent in early trading before recovering modestly.

The ruble has lost about 42 percent of its value against the U.S. dollar and 36 percent against the euro since the beginning of the year.

The central bank has predicted that the country's economy was unlikely to see any growth in 2015 or 2016.

The Russian government recently revised its economic forecast for 2015, predicting a drop of 0.8 percent instead of 1.2 percent growth.

With reporting by Reuters,TASS, AFP, and AP