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Ruble in free fall

December 11, 2014

Russia's national currency has plumbed new lows, reflecting price developments on the global oil market and the domestic economy's structural problems. The central bank warned of alarmingly high inflation.

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Ruble coin in front of the Kremlin
Image: Alexander Nenenov/AFP/Getty Images

The ruble fell to an all-time low on Thursday, with Russia's currency trading at slightly over 55 units to the greenback in the morning and surpassing its previous low from Dec. 3.

The ruble also plunged to a new low against the euro, losing about 42 percent of its value since January as the nation kept being battered by Western sanctions over the conflict in eastern Ukraine and the steep drop in the price of oil.

The plummeting ruble highlighted Russia's dependence on revenues from the oil industry, the backbone of the national economy.

Gloomy outlook

Also on Thursday, Russia's central bank raised its key lending rate by another percentage point to 10.5 percent in a bid to curb soaring prices.

The Bank of Russia predicted inflation would reach 10 percent by the end of the year, with growth forecast to be flat in the next two years.

"Annual GDP expansion is expected to be close to zero in 2015-2016," the lender said in a statement, citing depreciation of the ruble and external conditions such as sanctions and sliding oil prices.

hg/cjc (Reuters, dpa, AFP)