While the Central Bank conducted enormous interventions in March to prop up the ruble as the Ukraine crisis worsened, it has been entirely passive in recent weeks.
The current trading corridor, which has been moved 42 times this year, is so wide that the Central Bank will not be obliged to intervene until a dollar is worth about 39 rubles, economist Tikhomirov said.
Data on the regulator’s website shows that it has not made any interventions on the currency markets since June, the longest such period since before the 2008 economic crisis.
“The 38.00 mark doesn’t look unachievable next week against the background of the lack of an initiative to exit from the [Ukraine] crisis either from Russia or Europe,” Evgeny Koshelev, an analyst at Rosbank, wrote in a commentary published by Prime Economic News Agency.
The ruble has been dragged lower by the dropping oil price. The price of Brent crude fell below $100 a barrel earlier this week, a 17-month low, amid ample supplies and fears of an economic slowdown in Europe.
At about 6 p.m., a dollar was briefly worth 37.93 rubles, the Russian currency’s weakest moment against the greenback since 1998, when the ruble was restructured in the throes of economic crisis.
“Geopolitics is the main factor moving the ruble,” said Vladimir Tikhonov, chief economist at BCS Financial Group in Moscow.
The ruble has lost 15.4 percent of its value against the dollar since the start of the year and hit four historic lows — three of them in the last fortnight as growing evidence of a full-scale Russian military incursion inside Ukraine pushed the EU to move towards a new round of sanctions.
US Dollar Strong
[Reuters] The U.S. dollar headed for its ninth straight week of gains on Friday, some measure of how the economic fortunes of the United States and its major economic peers are diverging after six years of financial turmoil.
A broad rise for the greenback was the main bet of most major investment houses this year but it has taken a very long run of relatively good U.S. numbers and a surge in concern over European and Japanese growth for the currency to deliver.
Investors are convinced a Federal Reserve meeting next Wednesday will rubber-stamp a shift towards higher interest rates in 2015, as suggested by research from the U.S. central bank this week.
A range of political shocks to the system, from turmoil in the Middle East to fighting in Ukraine and a referendum on Scottish independence, have added to support for the greenback against emerging and developed world currencies.