Russia's ruble falls in value as China cuts yuan
Market value of Russia's national currency has fallen to a six-month low after China decided to devalue its yuan for the second consecutive day.
The development came on the back of a similar fall in global oil prices on Wednesday when every US dollar topped 65 Russian rubles, AFP reported.
During early daily trade, the Russian ruble hit USD 65.25 and 72.48 euros, though it later picked up slightly approaching the lows of over 67 rubles in early February.
The ruble's staggering 20-percent fall over the last two months has triggered new fears of market destabilization and a run on the currency similar to a previous one in December, which was caused by falling oil prices and imposition of Western sanctions on Russia over allegations that Moscow played a role in Ukraine crisis. Moscow firmly rejected the allegation, noting that West’s approach to Kiev was the main cause of unrest in the eastern part of Ukraine.
Russia's government has predicted that the economy would have hit the bottom in the second quarter, when it contracted by 4.6 percent year-on-year.
Analysts have noted that economic recovery will start in Russia during the current quarter.
According to market experts, the ruble is highly dependent on oil prices because oil and gas constitute the main sources of revenue for the government in Moscow.
When oil prices started to fall last year, Russia was optimistic that it would be followed by rapid recovery, though it was later proven that Moscow’s optimism had been "short-lived," said a note by ING Bank's chief Russia economist, Dmitry Polevoy.
Oil prices fell by 60 percent between last June and January, hitting as low as USD 45 a barrel, partly because of a supply glut resulting from the boom in US shale oil production.
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