Ruble Falls to 3-Year Low

The ruble fell to the lowest in almost three years against the dollar as Russia devalued the currency against its dollar-euro basket and tumbling oil prices battered the economy., 12/22/2008 5:15:43 AM

The ruble weakened as much as 1 percent to 28.4567 versus the dollar, the lowest level since January 2006, and was at 28.3525 at 3:15 p.m. in Moscow. Bank Rossii today allowed the ruble to decline for the second time in three working days and the ninth time since Nov. 11, according to a central bank official who declined to be identified. The currency fell 17 percent against the dollar since the beginning of August.

Russia’s Urals blend of crude traded at $39.82 a barrel today, or just 4 percent above its four-year low of $38.29 on Dec. 5. Russian oligarchs are vying for $78 billion of Kremlin loans to survive the credit squeeze as Russian companies prepare to meeting about $110 billion of foreign obligations due next year, according to the central bank, double the total owed in Brazil, India and China.

An internationally condemned war with Georgia, a plunge in oil prices and the worst global financial crisis since the Great Depression caused investors to withdraw $211 billion from Russia since August, according to BNP Paribas SA. Bank Rossii drained $162.7 billion, or 27 percent, from its foreign-currency reserves, the world’s third-largest, to prevent a sudden devaluation from causing a repeat of the bank runs of 1998, when the ruble tumbled 71 percent against the dollar.

The ruble fell 1.3 percent to 39.7050 against the euro. It weakened 1 percent to 33.4662 against the basket, made up of about 55 percent dollars and the rest euros and used to protect Russian exporters from foreign-exchange fluctuations.

Russia’s currency reserves fell $1.6 billion to $435.4 billion in the week to Dec. 12, compared with a drop of $17.9 billion the previous week, the central bank said today.