believe will eventually be a gradual depreciation of as much as 20%.
COINB0Y
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MOSCOW -- Russia Friday allowed the ruble to weaken for the fourth time since early November, once again guiding it 1% lower against a basket of dollars and euros.
The central bank, under pressure to depreciate the national currency after a plunge in oil prices and an exodus of capital from Russia, guided the ruble to 31.60 to the basket in early trade on the Moscow Interbank Currency Exchange, down from Thursday's close of 31.30, a person at the bank told Dow Jones Newswires.
That means the ruble has now fallen 4% since the authorities began what analysts believe will eventually be a gradual depreciation of as much as 20%.
"A strong and hard devaluation is what the central bank would prefer," said Pavel Galanichev, a currency trader at UniCredit in Moscow. "But there's political pressure to slow down the process."
Indeed, the central bank has been burning through billions of dollars in reserves to keep the ruble stable and make good on promises by government officials that there won't be a sharp devaluation.
The bank Thursday reported a weekly rise of $5 billion in reserves, leaving them at $454.9 billion after eight straight weeks of declines.
But analysts expect the falls to resume in the coming weeks as the bank continues to defend the ruble from almost constant selling pressure.
"The low oil price is rapidly shrinking Russia's budget and current account surpluses," Nordea analyst Jussi Hahtela said in a note. "Our calculations suggest that with oil below $70 a barrel, the budget will already be in deficit in 2009."
Most Russians monitor the ruble's exchange rate to the U.S. dollar and the central bank has generally used weakness in the greenback as an opportunity for a small depreciation.
The euro climbed against the dollar Thursday after the European Central Bank cut rates by 75 basis points in an effort to combat a recession in the euro zone.
The central bank, under pressure to depreciate the national currency after a plunge in oil prices and an exodus of capital from Russia, guided the ruble to 31.60 to the basket in early trade on the Moscow Interbank Currency Exchange, down from Thursday's close of 31.30, a person at the bank told Dow Jones Newswires.
That means the ruble has now fallen 4% since the authorities began what analysts believe will eventually be a gradual depreciation of as much as 20%.
"A strong and hard devaluation is what the central bank would prefer," said Pavel Galanichev, a currency trader at UniCredit in Moscow. "But there's political pressure to slow down the process."
Indeed, the central bank has been burning through billions of dollars in reserves to keep the ruble stable and make good on promises by government officials that there won't be a sharp devaluation.
The bank Thursday reported a weekly rise of $5 billion in reserves, leaving them at $454.9 billion after eight straight weeks of declines.
But analysts expect the falls to resume in the coming weeks as the bank continues to defend the ruble from almost constant selling pressure.
"The low oil price is rapidly shrinking Russia's budget and current account surpluses," Nordea analyst Jussi Hahtela said in a note. "Our calculations suggest that with oil below $70 a barrel, the budget will already be in deficit in 2009."
Most Russians monitor the ruble's exchange rate to the U.S. dollar and the central bank has generally used weakness in the greenback as an opportunity for a small depreciation.
The euro climbed against the dollar Thursday after the European Central Bank cut rates by 75 basis points in an effort to combat a recession in the euro zone.
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San Diego, CA
pressure on Iran and Russia. While Russia says that it
is not interested in a resumption of the Cold War, it has
already started.
Camelot