Russian Ruble Drops, 10-Year Low

123jump.com Staff
15 Jan, 2009
New York City

Ruble continued its weeklong slide and reached to a new low in ten years. Ruble, now down more than 25% in the last five months against dollar, is expected to drop another 10% in the next three to six months if the crude oil prices remain below $50 a barrel.

[R]11:00AM New York – Ruble continues its slide in the international currency markets.[/R]

Ruble continues its slide against the dollar and euro as investors continue to flee, crude oil prices decline and international prices of metals drop. The gas dispute between Ukraine and Russia dragged on for the third week as Russia demands better monitoring of delivered gas and higher prices from its clients in Europe.

Ruble plunged to 32.47 against a dollar and 42.55 against a euro. Ruble has now fallen more than 26% in last five months and dropped more than 9% in the last five weeks.

Latest media reports in Russia suggest that the government has lowered its estimate for the realized crude oil price in the current year to $40 a barrel from the previous estimate of $50 a barrel, a sharp fall from a year ago when prices were expected to be near $100 a barrel.

Russia depends on exports of crude oil, natural gas and base metals for foreign currency.

The officials at Bank Rossii confirmed that the trading band was widened in the last five days for the fourth time and the central bank is prepared for decline in Ruble in the international markets.

Russian companies are bracing for a large debt and interest payment due this year. Nearly $80 billion in foreign currency are due to international bond holders which may put additional pressure on the currency.

Foreign exchange traders in Switzerland and Germany are looking for ruble to sink as low as 36 to a dollar by the mid-year.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 415.14 or 4.92% to 8,023.31, Hang Seng index in Hong Kong decreased 461.65 or 3.37% closed to 13,242.96 CSI 300 index in China lower 0.37 or 0.02% closed to 1,954.87. ASX 200 index in Australia decreased 157.50 or 4.27% closed to 3,529.50. The KL Composite index in Malaysia lower 16.01 or 1.75% closed to 897.45.

The Kospi Index in South Korea decreased 71.34 or 6.03% to close at 1,111.34. SET index in Thailand closed lower 13.25 or 3.01% to 426.26 and JSE Index in Indonesia decreased 43.41 or 3.13% closed to 1,343.49. The Sensex index in India decreased 323.75 or 3.46% closed to 9,046.74.

Europe Markets Review

In London FTSE 100 Index traded lower 10.68 or 0.26% to 4,169.96, in Paris CAC 40 Index decreased 11.14 or 0.36% to 3,040.86 and in Frankfurt DAX index traded lower 13.41 or 0.30% to 4,408.94. In Zurich trading SMI increased 33.75 or 0.63% to 5,412.56.