The Russian ruble hit fresh record lows early Friday, pressured by a further drop in oil prices and the country's sluggish economic outlook. The new rout in the ruble comes the day after the central bank showed no commitment to defend the currency's exchange rate. The Bank of Russia raised its key rate by 100 basis points, to 10.5% from 9.5%, which was less than what analysts had expected. It also said the ruble was undervalued by up to 20% even at current oil prices. The rate rise and comments did little to buoy the Russian currency. The ruble dropped to 57.0045 against the dollar in the first minutes of trade on the Moscow exchange Friday, taking its year-to-date decline to nearly 43%. The latest drop in the ruble came after Brent crude oil prices slid to $63.31 for the first time since September 2009. Against the euro, the ruble touched a fresh low of 71 compared with levels of around 45 rubles per euro in December last year. Recent currency interventions by the Bank of Russia have also failed to reverse the downward trend of the ruble. The central bank said Friday it sold $206 million on Wednesday, bringing the overall amount of December interventions to $5.48 billion. The central bank let the ruble float freely in early November, an essential step toward inflation-targeting, but it said it reserves the right to intervene when necessary for financial stability. The falling ruble potentially offers some relief to the country's commodity-dependent and export-focused budget, but is seen as having an adverse impact on economic growth by fueling inflation, killing investment activity and denting household wealth. Source: Market Watch
