Depreciation, Depreciation and Depreciation
The perfect economic storm continues to brew in Russia; the financial crisis is sapping demand for Russian securities, and a decline in the price of oil (as well as other commodities) has turned the balance of trade from surplus to deficit. As a result, Russian banking officials seem resigned to a depreciation in the Ruble, but are understandably averse to a sudden devaluation, which could shock the economy into complete collapse. Nonetheless, in the last week, the currency recorded record drops as the Central Bank took advantage of Dollar weakness to adjust the band in which the Ruble is permitted to fluctuate (read: decline). Given continued weakness in the price of oil, combined with a faltering economy and surging domestic unemployment, investors should continue to expect precipitous drops in the Ruble, as it sinks to a sustainable level.
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Posted on December 27, 2008
at 7:31 pm
Written / posted by: Simon
Filed under: Currency Trading, forex trading