Ruble gains more than 10% after a concerning trading week

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Russia’s struggling ruble recovered some of its recent losses against the dollar this week as the market welcomed measures by the Central Bank of Russia to support the country’s banks, and the Finance Ministry said it would start selling its excess foreign currency holdings.
Russia’s struggling ruble recovered some of its recent losses against the dollar this week as the market welcomed measures by the Central Bank of Russia to support the country’s banks, and the Finance Ministry said it would start selling its excess foreign currency holdings.

After a volatile day of trading, the currency gained more than 10% on the Moscow Exchange after the Central Bank declared measures to reduce banking regulations and convinced the Russian public to keep their money in the national currency. The gain was likely aided by a recovery in oil prices with Brent crude, with the global price edging back above $60 a barrel to reach $62.44 a barrel in late afternoon European trading yesterday.

Analysts state that the ruble is far from safe after a selloff in recent days that has taken its drop in value against the dollar since the start of the year to around half, mainly as a result of plunging oil prices and Western sanctions over Russia’s intervention in Ukraine.

‘The Bank of Russia, the finance ministry and the government face a massive challenge, and the next few weeks, if not days, could decide if a full-scale financial crisis unfolds triggered by the selloff’, stated Piotr Matys, who is a rates strategist at Rabobank. The Central Bank’s announcement came after Prime Minister Dmitry Medvedev cautioned Russia’s top exporters to behave ‘responsibly’ and manage their currency profit in a way not to increase ruble instability.