As the price of crude oil on international markets approached a low $50 handle, the Russian ruble is hitting lows not see for three years.
On Thursday, the ruble began trading at 71.45 against the dollar on the Moscow Exchange. Ten minutes later it strengthened to 69.53 and stood at 69.2 as of noon. The ruble opened at 78.68 versus the euro, reported The Moscow Times.
The currency last collapsed during the 2014 recession in conjunction with a similar drop in the price of crude oil, which is material to the Russian federal budget. The Russian economy has struggled to diversify away from the production of hydrocarbons.
As the Kremlin’s foreign successes have become less visible and less impactful, Russians are focusing on economic hardships at home. Basic survival for ordinary Russians has become the main concern. A lower ruble could force a recurrence of high inflation.
The Russian Central Bank has allowed the ruble to float after unsuccessfully attempting to stabilize it with foreign currency reserves during the last period of weakness.