Russia’s ruble sank the most against the dollar in a decade this week as the central bank quickened its devaluation of the currency to protect reserves.
The ruble tumbled to as low as 32.6675 per dollar, the weakest since the currency was redenominated Jan. 1, 1998, eight months before Russia defaulted on $40 billion of debt. The ruble is bound for a 5.5 percent decline in the first week of trading this year, the most since March 1999. Bank Rossii devalued the currency for the fifth time in six days, a central bank official said.
Russia is stepping up the pace of devaluation from an average of twice a week in November and December after spending $25 billion this week defending the currency, according to estimates by Trust Investment Bank in Moscow. Prime Minister Vladimir Putin pledged last month to use the nation’s currency reserves, the world’s third-largest, to avoid “sharp” declines in the ruble. The stockpile shrank 29 percent to $426 billion since August.
“The moves now are faster, because the slower they move the easier it is for the market to position for further devaluation,” said Roderick Ngotho, an emerging-markets currency strategist in London at UBS AG, which forecasts a further 6.8 percent depreciation in the ruble versus the basket.
Investors withdrew about $245 billion from Russia in the last four months of 2008, according to BNP Paribas SA, amid the country’s worst financial crisis since the 1998 economic collapse, plunging commodity prices and an internationally condemned conflict with neighboring Georgia.
The ruble has lost 28 percent against the dollar and 15 percent versus the euro since August. The currency has slipped 27 percent against the basket, with the central bank allowing 17 depreciations in the past two months.
From Bloomberg News.
The ruble tumbled to as low as 32.6675 per dollar, the weakest since the currency was redenominated Jan. 1, 1998, eight months before Russia defaulted on $40 billion of debt. The ruble is bound for a 5.5 percent decline in the first week of trading this year, the most since March 1999. Bank Rossii devalued the currency for the fifth time in six days, a central bank official said.
Russia is stepping up the pace of devaluation from an average of twice a week in November and December after spending $25 billion this week defending the currency, according to estimates by Trust Investment Bank in Moscow. Prime Minister Vladimir Putin pledged last month to use the nation’s currency reserves, the world’s third-largest, to avoid “sharp” declines in the ruble. The stockpile shrank 29 percent to $426 billion since August.
“The moves now are faster, because the slower they move the easier it is for the market to position for further devaluation,” said Roderick Ngotho, an emerging-markets currency strategist in London at UBS AG, which forecasts a further 6.8 percent depreciation in the ruble versus the basket.
Investors withdrew about $245 billion from Russia in the last four months of 2008, according to BNP Paribas SA, amid the country’s worst financial crisis since the 1998 economic collapse, plunging commodity prices and an internationally condemned conflict with neighboring Georgia.
The ruble has lost 28 percent against the dollar and 15 percent versus the euro since August. The currency has slipped 27 percent against the basket, with the central bank allowing 17 depreciations in the past two months.
From Bloomberg News.
