Oil breaks the ruble

Russian national currency rate began to drop today following cheap oil prices, which dropped to $47.2 per barrel. The dollar rose to 58 rubles, while the European currency exceeded psychological mark of 65 rubles for the first time since February 1, data of the Moscow stock exchange shows.

In an interview with Vestnik Kavkaza economists agreed that the main reason for the current situation is the decline of oil prices, which once again became a leading factor in exchange rate dynamic.

The head of the Regional Banking Association, the chairman of the Duma Committee on Economic Policy, Innovation and Entrepreneurship Development, Anatoly Aksakov, said that "oil is to blame this weakening of the ruble. Oil prices not only stay below $50 per barrel, but also have a small downward trend. They were obviously influenced by the increase in the US refinancing rate, which made dollars more expensive and respectively, oil in dollars became cheaper," he noted.

The head of the department of stock markets and financial engineering of the Faculty of Finance and the Banking Business of RANEPA, Konstantin Korischenko, pointed out that oil is currently very cheap in rubles. 

"Dynamics of oil prices is now negative, oil stays below $50 per barrel. It also stays at a low level in rubles (2.7 thousand rubles per barrel), which does not help Russia's budget. The ruble won't grow while oil is trading so cheap. It's possible that it will drop to 60 rubles for $1," he said.

An associate professor of Stock Markets and Financial Engineering of RANEPA, Vasiliy Yakimkin, added that in addition to negative dynamic of oil prices and lower interest rate of the Russian Central Bank there's a partial withdrawal of capital from Russian assets by Western hedge funds.

"All of this creates a negative background. It's also necessary to mention regular verbal interventions of the Ministry of Finance, which show that it needs a cheaper ruble," he stressed.