Office employees take a break near the skyscrapers of the “Moscow City” in Moscow, Russia, on Tuesday, Dec. 16, 2014.MOSCOW — Russia’s embattled ruble extended a week of catastrophic losses by dropping 4 percent at the opening of trading in Moscow.
The world’s worst-performing currency along with the Ukrainian hryvnia, the ruble has lost more than 50 percent of its value this year. It traded at 70.7 per dollar Wednesday morning, or 4 percent lower than at the closing on Tuesday.
The ruble lost over 19 percent of its value this week despite Tuesday’s massive interest rate hike by the Russian central bank.
The ruble has fallen sharply in recent weeks and is down more than 50 percent since January, due to sinking oil prices as well as the impact of Western sanctions imposed over Russia’s involvement in Ukraine’s crisis.
The ruble’s fall was not reversed by the Central Bank’s dramatic middle-of-the-night decision on Tuesday to raise the rate to 17 percent from 10.5 percent.
The move is intended to make it more attractive for currency traders to hold onto their rubles. Doing so gives them a major return in comparison to many other currencies where interest rate returns are near zero percent.
Other options available to the Russian authorities to stem the selling tide could be imposing capital controls or actual intervention in the markets — buying rubles, for example.
Russia’s Economic Development Minister Alexei Ulyukayev on Tuesday denied that the government was considering imposing capital controls but said that the rate hike came too late.