Russia: Ruble Plummets in Worst Currency Crisis Since 1998

Following an unsuccessful attempt to prop up the economy by means of an interest increase less than one week ago, the Russian Central Bank again moved to prop up the plummeting Russian ruble by raising the interest rate to 17%. The hike in interest rates coincided with value drops in the Russian ruble not seen since the Russian financial crisis in 1998, with latest statistics showing that the currency lost approximately 10% of its value against the dollar within a 24 hour period. The latest drop makes up for a nearly 20% drop in currency value against the dollar within the past week, with an overall drop of 50% during the calendar year.

Analysts have been quick to point out that Russia’s “public finances and reserves” are currently much stronger than they were on the eve of the 1998 financial crisis, but that the state of currency in Russia suggests that a larger, more pronounced currency crisis may be in store if the Russian economic situation does not improve.  Russian Economy Minister Alexei Ulyukayev has been quick to eschew talk of controls on Ruble-for-dollar exchanges,  though the situation does not appear to be ameliorating despite the dramatic central bank interest increase.

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