Saturday, December 6, 2008

Russian Ruble: dropping...and still dropping

Russia weakened the ruble for the fourth time in a month as crude oil fell under $40 a barrel this week, according to Bloomberg.

The Kremlin has been fighting to shore up the ruble, drawing heavily on its vast foreign reserves. However its piecemeal attempts to strengthen the ruble could undermine its own efforts. This gradual approach has primed expectations of further devaluation. Companies and individuals have been converting rubles into foreign currencies, which could exacerbate the situation.

Russia is facing its most severe economic and financial crises since 1998. Window on Eurasia's Paul Goble thinks the actions of Russia's leaders are worried the situation could spark social and political unrest.

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