Ruble Weakens Further Against Euro, Dollar as Analysts Predict Sharp Fluctuations

The ruble lost more ground against the euro and the dollar on January 12, the Vestnik Kavkaza news agency said.

The ruble fell 5.987 versus the euro to 74.3551 and dropped 6.4987 against the dollar to 62.7363, the report said, adding that analysts expect the ruble to fluctuate sharply on the Moscow Exchange in early 2015.

The dollar’s value rose by 10 rubles over the New Year holiday period and S&P issued a negative forecast. According to Goldman Sachs forecasts, prices for Brent and WTI oil could fall to around $40 per barrel in the first half of the year, the agency said.

Alexander Abramov, the leading scientist of the RANEPA Institute of Applied Economic Research, said the S&P ratings could make foreign funds flee Russia, and that the trading on January 5, 6 and 8 was too early in the year to allow forecasts, the report said.

The expert added that the Central Bank will refinance banks with 7.5 trillion rubles via REPO deals, thus causing a decline of the exchange rate. Abramov said the ruble may drop to 70-75 rubles per dollar if S&P gives Russia a negative rating, the agency said.

Dmitry Piskulov, the chairman of the board of the National Currency Organization, explained that markets were working on January 2-3, even in London. He predicted that the opening of trading after the holidays will be followed by an outflow of foreign capital from Russia, the report said.

Piskulov added that there is only a 25% chance of the exchange rate hitting 100 rubles per dollar in February, as some rumors have suggested. He said an increase from 62 to 100 rubles per dollar is very unlikely, even if oil reaches $20 per barrel, and that the Bank of Russia would take serious measures to prevent it. Abramov doubted such a significant fall in the ruble’s value and predicted that the dollar will be worth 70-75 rubles, the report said.