Russia Steps In To Support Tumbling Ruble

The Russian ruble tumbled Monday to a four-year low amid a crash in oil prices as authorities rushed to assure the public the country has accumulated enough funds to withstand the blow

Moscow, (UrduPoint / Pakistan Point News - 9th Mar, 2020 ):The Russian ruble tumbled Monday to a four-year low amid a crash in oil prices as authorities rushed to assure the public the country has accumulated enough funds to withstand the blow.

The ruble fell 9.0 percent to trade at 75 to the US dollar, a rate last seen in early 2016, before bouncing back somewhat.

Shares in Russian companies including oil giant Rosneft and Sberbank lender also plunged in London -- the Moscow Stock Exchange was closed for a public holiday Monday.

The Russian Central Bank and the finance ministry on Monday quickly announced measures aimed at stabilising the ruble to ensure financial stability.

Russians have been chafing under multiple rounds of Western sanctions since Moscow annexed Crimea from Ukraine in 2014 and tumbling oil prices may deal a new blow to the country's economy and President Vladimir Putin's already flagging approval ratings.

Saudi Arabia launched an all-out oil price war on Sunday with the biggest cut in its prices in the past 20 years, after OPEC and Moscow failed to clinch a deal to reduce output.

A meeting of producers was expected Friday to agree to deeper cuts to counter the impact of the coronavirus outbreak but Russia refused to tighten supply.

In response, Riyadh slashed its price for April delivery by $4-$6 a barrel to Asia and $7 to the United States.

On Monday, Russia's central bank said it was halting foreign currency purchases for the next 30 days.

"This decision has been taken to increase the predictability of actions of monetary authorities under the conditions of significant changes on global oil markets," it said.

The central bank said it would continue monitoring the situation and was ready to use "additional instruments in order to maintain financial stability".

The finance ministry said it would be selling foreign currencies in the open market if the oil price remains below $42 per barrel so as to have "a stabilising effect on the national currency exchange rate." The ministry said Russia has accumulated enough reserves to withstand low oil prices.

In early deals, London's benchmark Brent oil contract plunged 20.5 percent to $35.98 per barrel while New York's WTI crude stood at $31.69, down 23.3 percent.

As of March 1, the National Wealth Fund, the country's sovereign wealth fund, had assets worth $150 billion, or 9.2 percent of gross domestic product, the ministry said.

That will be enough to last six to 10 years if oil prices fall to $25-30, it said.