The beleaguered ruble suffered Monday its biggest one-day fall since the 1998 financial meltdown after oil prices sank further, aggravating worries about Russia's economy. As concern mounted over the outlook for Russia's sanctions-hit economy, lawmakers asked prosecutors to probe the central bank over its decision to let the ruble float freely.
The Russian currency fall by nearly 9 percent at one point to 53.9 rubles against the dollar and 67 rubles against the euro. The currency then clawed back a little ground to 52 rubles against the dollar and 65 against the euro, still down some 4 percent for the day. The ruble has now depreciated by nearly 60 percent against the dollar since the start of this year due to collapsing oil prices and Western sanctions imposed against Russia's support for a separatist uprising in eastern Ukraine.
The further drop in the price of oil in recent days - to five-year lows - has a major impact on the Russian economy as oil and gas exports are a main source of revenue for the federal budget, and has helped push the ruble down sharply. Many analysts increasingly fret over the country's economic outlook and the authorities' apparent reluctance to change tack over the Ukraine crisis as the economy heads into recession. "This is shock and horror," Elina Drozdova, a 39-year-old mother of two, told AFP, referring to the plummeting currency. "The first thought is, 'goodbye summer vacations'." "Our lives are becoming expensive directly in proportion to the rise of the dollar and euro," she said.
According to a new study by the polling company Public Opinion, 50 percent of Russians said the falling ruble was having an impact on their lives. The pollster said Russians were concerned about price hikes and inflation.
"Prices are growing like mushrooms," Public Opinion cited one respondent as saying. Signs of panic buying have emerged in recent weeks, with many Russians hoarding buckwheat, one of the country's main staples. Earlier this year the ruble's slide had been slowed by daily interventions to support the value of the currency by the central bank, but last month the Bank of Russia let the ruble float freely.
The General Prosecutor's Office said on Monday that several lawmakers had officially requested that prosecutors probe the central bank over its policies. "Their arguments are now being studied," a spokeswoman told AFP. Sergey Romanchuk, the head of currency dealing at Metallinvestbank, called the ruble losing nearly a fifth of its value in the past week "a situation of financial instability".
He said on Facebook that "the central bank must mitigate volatility on the currency market," and risks "losing its main asset - trust." President Vladimir Putin, who enjoys sky-high ratings triggered by the March seizure of Crimea from Ukraine, has so far brushed off concerns, saying the economic damage from the falling ruble was "not fatal". In a fresh sign that the Kremlin was girding itself for a protracted political battle with the West, Putin's chief-of-staff Sergei Ivanov urged officials Monday to put together plans to replace imports across all industries.
The country is expected to record capital outflows of $130 billion as Russians hedge against the falling ruble by converting their savings to foreign currency. Finance Minister Anton Siluanov said last week that Russia was losing up to $140 billion (112 billion euros) a year because of Western sanctions and plunging oil prices.
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