MOSCOW: Russia’s battered ruble sank Monday to its lowest point this year as Asian and European stock markets nosedived on concerns over the Chinese economy.
Russia’s dollar-denominated RTS stock index had plunged nearly 4.5 percent by 11 a.m. local time as the ruble tumbled to 70.92 against the dollar, its weakest since December 2014.
The ruble-denominated Micex dropped by 1.76 percent before recovering slightly in early afternoon trade.
The slide in oil prices and Western sanctions over Moscow’s role in the Ukraine crisis have pummeled the Russian economy in recent months, with the ruble collapsing.
Russia’s recession deepened in the second quarter as gross domestic product contracted by 4.6 percent compared with the same period last year.
Russia’s currency has fallen more than 20 percent against the dollar in the past two months, sparking fears of more instability after a period of relative recovery.
Russia’s central bank — which did not comment on the ruble’s depreciation on Monday — was forced to drastically hike interest rates in December as it battled the ruble’s plunge but has cut back the rate this year to assuage inflation fears.
The Bank of Russia’s key rate stood at 11 percent.
Inflation rose to a vertiginous 15.6 percent last month, shrinking Russians’ purchasing power.
“Of course I’m not pleased that prices have gone up,” hotel worker Yulia Seleznyova told AFP. “This is directly affecting me, and I’d like the ruble to go back up.”
The ruble lost around half of its value in 2014 but recovered slightly as energy prices stabilized this year, allowing officials to claim the worst of the crisis had passed.
But the recent decline — resulting in part from a renewed fall in oil prices that hit six-year lows on Monday — has highlighted how volatile the situation remains.
“The ruble’s value is most of all influenced by oil prices,” RBK business daily quoted Alexander Muhlberger, a director at BCS financial group, as saying.
“If oil prices keep declining, then it’s clear what the ruble’s trajectory will be.”
Economy Minister Alexei Ulyukayev said he expected oil prices to briefly drop below $40 a barrel, Russian news agencies reported.
Russian authorities have predicted that GDP will contract by 2.8 percent this year before picking up again next year.