Times of Oman2
Price in RO
24ct / gm
22ct / gm
Forex Rates vs R01
Back to Homepage
Putin rejects devaluation as rouble hits 5-year low
January 22, 2014 , 4 : 36 pm GST
SAVE THIS ARTICLE
President Vladimir Putin on Wednesday dismissed growing speculation about an imminent currency devaluation as the Russian rouble hit five-year lows amid growing capital outflows and diminishing central bank support.
The Russian leader said a day after a meeting with Central Bank chief Elvira Nabiullina that the government welcomed greater rouble flexibility that could reinvigorate sluggish growth.
The Central Bank had announced earlier this month that it was withdrawing "targeted" daily currency trading interventions as it gradually moves toward a fully floating exchange rate by the start of next year.
"The Central Bank is now only partially involved in currency regulation," Putin said during a meeting with university students in Moscow.
"And the freer (the exchange rate) the Russian currency, the better — in the long run — it will be overall because this will force the economy to be more effective."
Putin added that Nabiullina "did not say anything at all" about a government - orchestrated currency devaluation that could help Russian industry by making the country's goods more competitive abroad.
He spoke only moments before Industry and Trade Minister Denis Manturov told parliament that Russia's industrial production rate "managed to reach 2012 levels" after being in decline for most of the
The Russian rouble has hit five-year lows this week against the Central Bank's foreign currency basket of dollars and euros — a politically worrying trend for the Kremlin because of the accompanying rise
in the cost of living.
It was trading at 33.91 against the greenback and 45.96 against the single European currency on Wednesday — rates not seen since the worst months of Russia's 2008-2009 financial crisis.
Economists attributed the latest decline to the Central Bank's decision this month to stop spending up to $60 million (44 million euros) a day on efforts to keep the rouble within a predetermined trading range.
The Central Bank still reserves the right to spend between $200 million and $400 million a day on "non-targeted" interventions that kick in when the rouble falls outside the defined trading band's boundaries.
Traders interpreted the decision as a sign that the Central Bank was partially giving up its expensive defence of the Russian currency in a weak economic climate and immediately began buying up dollars and euros.
But economists also attributed the rouble's weakness to investment capital outflows that amounted to three per cent of gross domestic product last year.
Russia external position also deteriorated last year due to a falling trade surplus and meagre foreign investment.
The London-based Capital Economics consultancy noted that Russia's current account surplus last year was unable to cover capital outflows for the first time for five years.
One "consequence of Russia's deteriorating external position is that the rouble is likely to continue to weaken," Capital Economics observed in a research note.
Rate this Article
Rates : 0, Average : 0
Post a Comment
Did you like this section? Leave a comment!
Your Name :
Your Email Address :
Your Comment :
Enter Image Text:
No Comments Posted
Latest in this section
Bank Muscat’s net profit leapfrogs 59% to OMR40m
Shipping lines set to move to Sohar
National Centre for Statistics and Information to conduct foreign investment survey in Oman
Samsung curved television makes a mark in region
HSBC Bank Oman to sell Indian business to Qatar’s Doha Bank
TOP RATED ARTICLES
Admiral Robin K. Dhowan elected navy chief after deadly submarine fire
Real Madrid beats Barcelona by 2-1 in the Copa Del’ Rey (Kings Cup) final
Times News Service
Australia sees new search phase if mini-sub fails to find MH370
'Shouldn't we move?' Ferry evacuation under scrutiny
Theft cases decline in Muscat: Royal Oman Police
Times News Service
More in News
More than just a moustache - Adolf Hitler vs Charlie Chaplin
Urban gardens greening Berlin rooftops, airfield
Italian violinist strikes a chord with street children
Tips for writing a good article
How to choose your writing form and communicate your creative thoughts
Natasja Engholm - Special to Times of Oman
More in Features
Turkey must take the lead role to end conflict in Syria
Attempts to remake Eden are dangerous
Efforts on to wash off Japan’s war crimes
Middle East, Muslim world losing battle of hearts, minds
Aijaz Zaka Syed
Blue is the new green
Yasser Al Saleh
More in Columns
Get Top news by E-mail.
Copyright © 2012 Muscat Press & Publishing House SAOC. All rights reserved. Times of Oman is not responsible for the content of external internet sites.
For reprint rights contact:
TOO Online Editorial