Arab Today, arab today russian ruble hits historic low against euro
Last Updated : GMT 21:46:51
Arab Today, arab today
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Russian ruble hits historic low against euro

Arab Today, arab today

Arab Today, arab today Russian ruble hits historic low against euro

Moscow - AFP

The Russian ruble hit a record low against the euro on Friday and was at its weakest point against the dollar for nearly five years as it continued a month-long slide. Traders said the declines were likely to continue against the backdrop of strongly negative investor sentiment about emerging markets and eroding Central Bank support for Russia's belaguered currency. The Central Bank intends to introduce a fully floating exchange rate starting next year and shift its focus to the fight against persistently high inflation -- measures roundly applauded by economists but feared by Russian consumers. The euro broke through its record strong point of 47.25 against the troubled Russian currency in late Friday afternoon trading and stood at 47.31 rubles at 4:20 pm (1220 GMT). The ruble's previously low against the single European currency came in the worst months of Russia's financial crisis in early 2009. The dollar had also gained more than one percent against the Russian currency and was trading at 34.50 rubles on the Moscow Exchange. Since late December, the ruble has lost more than five percent of its value against a basket of euros and dollars which the Central Bank uses to set its policies. Traders said the latest bout of selling accelerated after Russian Economy Minister Alexei Ulyukayev was quoted as saying on Thursday that the ruble was more likely to weaken than strengthen in the coming weeks. Russian Finance Minister Anton Siluanov told Moscow Echo radio on Friday that he "sees no problem" with the current ruble exchange rate. "This is the policy of the Central Bank and the financial authorities -- to make the exchange rate more flexible," Siluanov said. The Central Bank eliminated some of its support measures for the ruble earlier this month and no longer spends $60 million (44 million euros) a day on "targeted" interventionist measures. It still spends between $200 million and $400 million a day on ruble purchases when the Russian currency slips outside the bounds of a predetermined trading band. But the Central Bank also reserves the right to shift that trading corridor to a higher exchange rate as pressure on the ruble mounts -- a step it has taken repeatedly this year. Traders brace for further declines The ruble's fate carries a much wider political dimension in Russia because of a painful post-Soviet devaluation in the early 1990s that wiped the saving of tens of millions and made many question the wisdom of market reforms. The ruble also lost a third of its value over a few days when Russia defaulted on its foreign debt in 1997. The global financial crisis of 2008-2009 also put the currency under strain. Russian President Vladimir Putin this week stressed that the government did not intend to pursue similar currency weakening policies and would only let the ruble more closely follow its natural course. But traders said the ruble was likely to remain under pressure at least until a flood of foreign tourists brought in a fresh supply of foreign currency when they descended on the Black Sea resort town of Sochi for the Winter Olympic Games next month. "In recent days, the ruble has not even been responding to positive news," the Nord Capital financial advisory said in the research note. "And here we have the negative news of steep US market declines and a weak US futures open," it noted. Chief AFK Sistema economist Yevgeny Nadorshin said the ruble's troubles were linked largely to the US Federal Reserve's decision to finally start tightening its monetary policy. "At the same time, the European Central Bank is promising to maintain an easy credit policy and part of the investors are moving into European bonds, which look much safer now than two years ago," said Nadorshin. "This leads to a stronger euro," Nadorshin told AFP.

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