TOKYO: The embattled ruble recouped some losses in Asian trade on Wednesday after crashing to unprecedented lows, but market players were not convinced of authorities' ability to reverse the downward trend.
The Russian currency dived to 80 rubles against the dollar and 100 on the euro Tuesday, testing President Vladimir Putin's ability to ride out both the country's economic storm and his clash with the West.
To make matters worse, the White House announced that US President Barack Obama plans to approve tightening sanctions against Moscow over its Ukraine incursion.
In Asian afternoon trade, the dollar bought 69.07 rubles while the euro fetched 84.96 rubles.
The Russian central bank boosted its key interest rate to 17.0 percent from 10.5 percent but the move "has failed to stabilise the ruble," said Sebastien Barbe, head of emerging market research and strategy at Credit Agricole.
The rate hike and plunging oil prices suggest "a meaningful recession next year," he said in a note.
"Further depreciation pressure suggests that rate hikes and FX intervention may not be enough. At the current juncture, the odds of targeted capital controls are increasing significantly."
The almost halving of crude oil prices in the past six months has been devastating for Russia's economy, which is heavily dependent on exports of natural resources.
The euro was mixed after data surprises Tuesday depicted a eurozone economy holding up better than feared, as the 18-nation bloc reported a record trade surplus and the ZEW index for German investment sentiment improved.
The common European currency bought $1.2495, against $1.2511 in New York, while it edged up to 146.07 yen against 145.86 yen.
The Japanese currency was firm on safe-haven buying, with the dollar at 116.89 yen, up from 116.59 yen in US trade but still down from 117.39 yen in Tokyo earlier Tuesday.
Investors are awaiting the outcome of the Federal Reserve's monetary policy meeting later Wednesday. The Fed is expected to adjust its forecasting language to allow a better understanding of its interest-rate hike plans.
Comments
Comments are closed for this article.