Russia's Ruble Drops to 3-Year Low Against Dollar as it Suffers in Heat of Global Meltdown
Russia's ruble fell to a three-year low against the dollar Friday after the Central Bank allowed a third sharp drop in the currency in five days as the government continues to feel the heat of the global meltdown.The ruble lost 1.4 percent on the MICEX main foreign currency exchange to reach 34.3 against the euro-dollar basket. It sank to 29 against the dollar -- a level that hasn't been seen since 2005 -- and 40.8 against the euro -- an all-time low.
The Central Bank set the official exchange rates for the dollar and euro in line with trading quotes.
The depreciation was the third in just five days and the 11th since Nov. 11, when the supervised slide began.
Amid diving oil prices and the associated market downturns, it is unclear where the slide will end as the government continues its policy of a managed float rather than releasing the ruble altogether.
Central Bank deputy chairman Alexei Ulyukayev insisted Friday the government was implementing a managed float and that it was in control of the situation.
"We believe the policy of a gradual change in the ratio of rates to be right. It is the least painful for market participants and households," Uluykayev was quoted as saying by the Interfax news agency.
The Kremlin gave a sign of things to come, however, when its top economic adviser, Arkady Dvorkovich, said in comments televised Thursday that the ruble would continue to drop into the new year, and forecast a 2009 average of "a little under" 32 rubles. He said, however, that there would be no currency collapse.
The ruble has shed about 20 percent of its value against the dollar since its high of 23.4 in early August.
Russia's President Dmitry Medvedev said in televised remarks earlier this week that the ruble will become "a bit more flexible" to reflect the economic situation.
The Kremlin is anxious to avoid a repeat of the 1998 financial crisis, when Russians rushed to withdraw their savings as the ruble plummeted.
It has stuck to the line that it will not allow any dramatic falls in the ruble despite analysts' recommendations to devaluate the ruble in one go.
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