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Russia’s Central Bank Devalues Ruble for Third Time in Week

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posted on Dec, 24 2008 @ 03:38 PM
"Dec. 24 (Bloomberg) -- Russia devalued the ruble for the third time in a week, sending the currency to its lowest level against the dollar since January 2006, as oil’s drop below $37 a barrel dimmed the outlook for growth.

The ruble, down 18 percent against the dollar since the beginning of August, weakened 0.9 percent against the U.S. currency to 28.6905 and 1.4 percent versus the euro to 40.1773, near an all-time low.

The central bank allowed the ruble to fall about 1 percent against a basket of dollars and euros, accelerating the slide after spending 27 percent of reserves, or $162.7 billion, trying to defend the currency over four months. Oil, Russia’s biggest export earner, lost 4 percent to $37.43 on the New York Mercantile Exchange and is down nearly 75 percent since the July high. The government requires oil to average $70 to balance its 2009 budget."

Reread the last line,"The government requires oil to average $70 to balance its 2009 budget."

With oil at about $32/barrel and no real sign of it stopping, this may start to really hurt Russia.

Wonder how their budget would do when it hit's $20?


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