Russia's currency fell to a six-month low Wednesday as oil prices were forced down by China's devaluation of the yuan for the second straight day, with the dollar topping 65 rubles. The ruble hit 65.25 to the dollar and 72.48 to the euro in early trading before recovering slightly, approaching the lows of over 67 rubles in early February.
The ruble's creeping 20 percent slide over the last two months has given rise to new fears of destabilisation and a run on the currency similar to one in December that was brought on by falling oil prices and Western sanctions over Ukraine. Russia's government has predicted that the economy would have hit the bottom in the second quarter, when it contracted by 4.6 percent year-on-year. Analysts have said they expect a recovery will start in the current quarter.
The ruble is highly dependent on oil prices, as oil and gas is the main source of Russia's income. Russia's optimism regarding an oil recovery has been "short-lived," said a note by ING Bank's chief Russia economist Dmitry Polevoy. Oil prices fell late Tuesday following China's first surprise currency devaluation.
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