Russia's Central Bank has allowed the country's national currency to devalue by another 1.2%, in the biggest fall for the currency in three months.
Wednesday's Rouble depreciation is the seventh from the Central Bank since November 11. The Bank broadened the trading band against the dollar-euro basket, allowing it to fall 1.2 %. The currency fell 43 kopecks in response, hitting 38 Roubles 81 to the Euro and 27 Roubles 45 to the dollar. The move comes the same day OPEC and Russia combined a production cut of 2 million and 320,000 barrels a day, respectively.The Rouble, and the Russian economy as a whole, is very much influenced by the price of oil, according to Stanislav Ponomarenko, Head of the Analytical Department at ING Russia. “It was only the oil price – the high oil price – in the past years that made Russia run a trade surplus. Now we see the oil price fell almost three times and at these levels, commodity prices won't be able to earn much from exports.” Some world economic experts have expressed a negative forecast for the fate of the U.S. dollar – which could spell even more trouble for the Rouble. Rob Vos, Chief Economist, at the UN Secretariat, in New York says that countries with large reserves in the U.S. currency wont be unaffected. “A lot of countries including countries like Russia or China have accumulated enormous amounts of reserves over the past couple of years in dollars. We'll see the value of their reserves decline rapidly if the dollar depreciates. So, it's a world-wide problem.” And as America's financial woes spread to other members of the global economy, central banks appear likely to take additional self-support measures in the near future. Making a monkey out of professionals with stock picks NCSP posts 9M 2008 Net Profit increase of 43% Downturn highlights Russia’s need for diversification