The Ruble sank its greatest amount since the Russian financial crisis in 1998, losing 10% of its value in a single day. As an emergency measure, the Russian Central Bank raised interest rates 650 basis points to 17%, as reported by Reuters. Although this might work as a first aid measure, only economic action on Tuesday will determine weather it was sufficient or more methods will be needed.
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An analyst at Eurasia Group said that, “If today’s measures fail to stem the ruble rout, there is a high probability that policy will veer in a more unorthodox direction.” The ruble has fallen over 50% against the dollar so far in 2014, and it has been the worst performing emerging market currency. The steep decline in oil prices, which have nearly been cut in half from historic highs, are mainly to blame for the faltering of the ruble, since oil comprises a large part of Russia’s GDP. Analysts expect to see a stabilizing of the ruble in the next few days, but the question is, will that firm ground last?
This is of course bad news for Vladimir Putin tells Russians he is the ideal leader for them because he has brought them financial stability….well…I’m sure the Russians are waiting to see it.