Russia: Ruble stabilizes after Putin’s speech

After Putin’s speech yesterday, the Russian ruble’s precipitous decline has stabilized somewhat. The President of Russia tacitly endorsed the central bank’s policy of interest rate inflation and kept outlook relatively focused on the currency crisis rather than declining government revenues and sanctions. The currency is holding steady right now at 61 rubles on the dollar, and Mr. Putin endorsed the interest rate hike, which, at 17%, is the highest since 2003.

Russian authorities are attempting to ease banking regulations and encourage exporters to sell foreign currency to bolster end of the year retail and trade sales. Impact of new sanctions by the US Congress last weekend were outweighed by a slight rally in oil prices, with Brent crude rising 2.5% to $62.6 a barrel. The Russian economy is still projected to contract next year by 4.5% – 4.7% according to projections by its own central bank.

While levels of desperation have not reached their lowest point, it should be noted that Russian financial authorities were weighing the possibility of forcing export-focused companies to relinquish their holdings of stronger currencies, if only to strengthen exports for the coming year while the currency stabilizes.

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