The Russian central bank on Wednesday devalued the ruble by 1.2 percent against a basket of euros and dollars, to a level of 38.80 rubles per euro and 27.45 rubles per dollar. This is the largest depreciation of the Russian national currency in the past three months and the eleventh in just over a month.
The move coincided with a joint decision by OPEC and Russia to reduce oil production by two million, or 320 thousand barrels per day, reports the Russia Today portal. The Russian currency, as well as the economy as a whole, largely depends on oil prices and the value of the US dollar. For this reason, some experts express concern that if predictions about the movement of the US currency value come true, it could bring even more problems for the Russian currency. – Many countries, including Russia and China, have accumulated huge reserves in dollars over the past years. If the dollar depreciates, their reserves will rapidly lose value as well. Therefore, this is a problem of global proportions – stated Rob Vos, chief economist at the United Nations Secretariat.
Since the beginning of the financial crisis and the fall in oil prices, the Russian central bank has avoided a stronger devaluation of the ruble and resorts to small steps of frequent depreciation adjustments, which according to some analysts only worsens the situation. Instead of calming the market, such a policy only intensifies speculation about the next move of the Central Bank. According to analysts at Commerzbank, writes the Financial Times, significant devaluation of the ruble can no longer be avoided. With the current approach, however, the Central Bank will have to continue to ‘pump’ huge amounts from foreign exchange reserves into the market to defend the ruble. (Davorka Zmijarević)
