The Russian share index plunged just over 10 percent to a new five year low on Monday while the rouble fell against the US dollar – a record low as falling oil prices and Western sanctions continue to weigh on the country.
By Monday afternoon it took more than 60 roubles to buy a single dollar. Some analysts have said the 60 mark is considered a “psychological barrier” for Russia’s national currency. Since the start of the year it has lost more than 45 percent against the dollar.
The fall came as Russia’s central bank said it was likely the economy would contract in the first quarter of next year and perhaps by as much as 4.5 percent as a whole if oil prices average 60 dollars a barrel.
The bank predicted inflation could peak at 11.5 percent next year and that reaching its mid-term inflation target by the end of 2017 would require keeping monetary policy tight next year.
Brent crude plummeted to almost 60 dollars a barrel on Monday – a five year low before recovering to just below 62 dollars.