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.

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  • Ron MacDonald

    Venezuela and Iran next to fall.

    • ☭ Vladimir Putin ☭

      Poland next to fall.

      • If you don’t stop at the Bug River this time dahling, we will do “best out of three” on Moscow, eh comrade?
        I am so sexy it hurts!

        • Frau Katze

          We’ve got Angela and Putin both posting, LOL!

    • Exile1981

      Venezuela is barely hanging on, if it wasn’t for the Cuban money being loaned to them they would have already crashed hard as their economy is so borderline that they can’t even meet the minimum needs of their populace.

    • Drunk_by_Noon

      You know what would be a delicious bit of irony?
      If Iran has devoted so much of their money and resources to nuclear weapons development that this dip in oil prices plunges them into economic chaos and civil insurrection which finally topples the mullahs.
      That would be hysterical!

    • Justin

      No. Only Iran will fall but Venezuela and Cuba will remain standing.
      dolgo Sotsializm bravada!

  • Alain

    Something does not add up with the Euro stronger than either the American or Canadian dollar. The EU is far from a financial success, so the figures are hidding the truth.

    • b_marco

      … a penetrating analysis.

    • Frau Katze

      The US and Canada are being dragged down by low oil prices. Europe gains only, since they produce little oil (mostly Norway, which is not in the EU).

      • FactsWillOut

        Doesn’t stop the gov’t here from raping the consumers.
        I’m still seeing $1.20+ deisel in ON and QC.
        Russia is less of a kleptocracy than Canada..

      • Alain

        Yes, I am aware of that aspect, but considering the financial basket case of the EU due to their unaffordable social programs and their level of production, it does not add up, especially when compared to the United States. The American economy is not as dependant on oil revenue as we are, and the EU has almost no natural resources.

  • Billy Bob Thornton

    The sanctions are the only reason for Russia hurting. Otherwise they would be firing on all cylinders. The fact is the US wanted that coup in Ukraine last year as a way to surround Russia. The US knows that their world reserve status is at stake. They need to ensure that the Yuan and the Rouble do not become the world reserve currencies. Should they become that, the US is going to become third world; I believe they are there due to their political class catering to special interest groups for much of the last 100 years. The US political class is responsible for selling out the USA.

  • Billy Bob Thornton

    The US and the West want Russia to join the IMF order. That is what this is about. They want the Russians to have IMF sponsored parties like social democrats, conservatives and liberals that are technocrats. That is why the Western governments hate nations that can stand by themselves and pay their own bills. I have known this for years. Observing is the easiest way to see what is going on of course with a clear mind. That is why Western political parties hate nationalists!

  • Pete_Brewster

    This has exactly shit to do with the price of oil. This is Wall Street trying to strangle Russia. A shitty little country like the Irish Free State, or the basketcase that was Yeltsin’s kleptocracy, would have already capitulated.

    As it is, Russia is debt-free, self-sufficient in oil, and has a large pile of foreign reserves with which Russian industry can be financed for years to come—along with people whose idea of deprivation is a bit more stringent than not being able to go on holiday in Switzerland.

    Sorry, lads. Putin won’t shit himself because you threaten to cut up his credit card. You really want him out and to grab Russia’s oil free of charge? See you on the Eastern Front.

    • Frau Katze

      It’s Saudi Arabia that started it. It’s still unclear why. They, and the other Gulf oil states, are the only ones that can survive prolonged low prices. It will drive the expensive techniques in the US and Canada out (at least for now). There is no upside for Russia, but you can hardly blame that on the US.

      • Pete_Brewster

        The House of Saud are rewarding their friends on Wall Street and the world’s capitals—Obama, Merkel et cie.—or rather prop them up, lowering the price of gas to help keep the rabble quiet. At home they give away gasoline for just that purpose.

        At the same time they’re punishing their enemies—Iran, Russia, North Americans who are earning a good living in Canadian and American oil fields for the first time in a generation and whose patience with Islam and governments who refuse to solve the Islamic problem has just about run out.

    • Frau Katze

      You have no supporters in the many commenters at WSJ, who are dismissing Putin’s mismanagement of the economy. Opinions are split on whether or not the sanctions have had any effect.

      • Pete_Brewster

        I can well imagine the lads at the Saudi Street Journal have no use for Putin. They understandably live in fear of someone not above sending rich people to prison.

        • Frau Katze

          These are people writing comments. I hardly they owe allegiance to WSJ. The same story is being told everywhere.

          It affects everyone, of course. I’m still try to figure out exactly how and why it happened.

    • Minicapt

      The FSB pension is holding up, thus far?

      Cheers

  • b_marco
  • winniec

    There was a cost for invading Ukraine and there it is. Was it worth it? This is not the end of the punishment.

  • FactsWillOut

    Only a commie would think cheap oil is bad.

    • Pete_Brewster

      Really? Ask someone who makes a living drilling for ethical oil. Fueling your car without helping finance Islamic State or the Houses of Saud or Thani costs more.