Oil price turmoil: Russian ruble hits new low despite rate rise

MOSCOW—The battered ruble plunged to a record low against the dollar again Tuesday, as investors grew convinced that the Russian central bank’s surprise move overnight to jack up interest rates to 17% wouldn’t be enough to alleviate the pressure on the currency from falling oil prices and western sanctions.

P1-BS237_MARKET_16U_20141215190908By early afternoon in Moscow, the ruble dropped sharply, reaching 80 to the dollar, a record low and a 35% decline from opening levels when it rallied briefly. At 1630 local time, the dollar was trading around 73 rubbles…

Traders said there was no indication yet that the central bank was intervening with sales of foreign currency, even as the dollar tested the record level of 80 rubles briefly. A further fall in crude oil prices on Tuesday also weighed on the ruble and other Russian financial markets…

Later, Deputy Chairman Sergei Shvetsov called the situation “critical,” the Interfax news agency reported. “At lot of (market) participants are in serious condition because of these events.”

“The choice the central bank made (to raise rates) was between very bad and very, very bad,” he said, noting that the bank could yet take more measures to stabilize the market…

The Canadian dollar has fallen too. The fall in oil prices has upset markets everywhere: the US dollar itself has fallen against the Euro and yen.  The situation for Russia is particularly bad because it so dependent on oil prices remaining high.

Related: Gulf can cope with cheaper oil, IMF says as bourses plunge

Scramble for safety as rouble, oil sink

Thirteen states across the country are now selling gas for less than $2 a gallon – the lowest price since 2009

Russia hikes its interest rate to 17% in desperate effort to prevent collapse of rouble and save its stricken economy

Bad news for Canada.