Tags: ruble | new | low | russia | putin | recession

Ruble's New Low Could Spell Disaster for Russia's Economy: Report

Image: Ruble's New Low Could Spell Disaster for Russia's Economy: Report
A Russian ruble coin. (Alexander Nemanov/AFP/Getty Images, file)

By    |   Tuesday, 16 Dec 2014 11:04 AM

The Russian ruble hit a new low in relation to the U.S. dollar on Tuesday, prompting the central bank to raise interest rates from 10.5 to 17 percent in an emergency meeting overnight.

Reacting to the news, a headline from The Washington Post's op-ed section read, "Sorry, Putin. Russia's economy is doomed." It went on to describe the rate hike as "a desperate move to save Russia's currency that comes at the cost of sacrificing Russia's economy."

After the news was announced, the ruble saw a precipitous drop, falling past its record low of 80 to the dollar all the way down to 73. That makes for a more than 20-percent drop in the past month.

"The continued decline was a sign that investors were rejecting the central bank’s intervention," wrote The Post in another report.

On top of that, oil prices are down across the globe, and U.S. sanctions against Russia for its invasion of Ukraine earlier this year are still in full effect.

"Since oil and gas account for 67 percent of Russia’s exports and 50 percent of federal budget revenues, oil prices drive the country's economic cycle," Jacob Nell, of Morgan Stanley, told Business Insider.

Inflation is expected to top 10 percent in the next few weeks, and the Russian economy is expected to shrink almost 5 percent if oil remains cheap next year.

"Putin's Russia, like the USSR before it, is only as strong as the price of oil," wrote The Post.



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The Russian ruble hit a new low in relation to the U.S. dollar on Tuesday, prompting the central bank to raise interest rates from 10.5 to 17 percent in an emergency meeting overnight.
ruble, new, low, russia, putin, recession
251
2014-04-16
Tuesday, 16 Dec 2014 11:04 AM
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