The rouble’s plunge against the dollar and the euro continues.
In October alone Russia’s central bank spent over 13 billion dollars of its reserves buying up the currency to stop it falling faster.
It is under pressure because of the Ukraine crisis, a dramatic slump in oil prices and Western sanctions, which limit Russian firms’ access to international capital.
Finance Ministry and central bank moves to give Russian banks and companies greater access to foreign currency have had little effect.
At the start of this year, one dollar would buy you 33 roubles. Now it is worth 41 roubles.
ING Eurasia analyst Dmitry Polevoy believes the central bank will respond: “To prevent panic among the people, and to secure financial stability of the Russian financial and banking system it’s unlikely they’ll allow a total and uncontrollable rouble crash. In the worst-case scenario the central bank will postpone its plan to switch to a floating rouble exchange rate, which was due by the end of this year or the start of next year.”
Russian banks say they have seen a big rise in demand for dollars from their customers, up 80 percent month-on-month in August; those are the latest available stats and were only released in mid October.
It is not a panic, but does suggest that more ordinary Russians are losing confidence in the currency.