Russian Ruble Crashes To Record Lows In “Panic”: “Some Investors Are Selling At Any Price”
by Tyler Durden
ZeroHedge.com
01/21/2016
Late last month, we took a look at Russia’s economy and concluded that although the country has proven to be remarkably resilient in the face of collapsing crude prices, the outlook is darkening.
The ruble has fallen for three consecutive years and is now under immense pressure both from Western economic sanctions and from crude’s inexorable decline. “The wish to hedge potential risks from geopolitics and commodities may well push the ruble to 75,” Evgeny Koshelev, an analyst at Rosbank PJSC in Moscow, told Bloomberg by e-mail in December. “It will be interesting to see if there’s a reaction from the central bank, government and households to this weakening.”
Koshelev’s warning proved prescient. Oil prices continued to slide in the new year as uncertainty out of China, a dour outlook for global growth and trade (see the IMF’s latest cut to global growth forecasts), and the prospect of increased Iranian supply weighed on a market that was already “drowning” in oversupply, to quote the IEA.
Meanwhile, the geopolitical situation took a nasty turn for the worst earlier this month when Saudi Arabia irked the Shiite world with the execution of Sheikh Nimr al-Nimr, whose death adds fuel to the sectarian fires already burning in Syria, Iraq, and Yemen. Thanks to Moscow’s intervention on behalf of Bashar al-Assad, Russia is now inextricably bound up in the melee.
Against this backdrop, the ruble has collapsed to fresh record lows and on Thursday marked its steepest two-day decline in nine months, falling beyond 85 per USD.
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