The Russian ruble has collapsed to a record low against a basket of dollars and euros despite intervention by the central bank to prop it up. The Russian central bank has spent as much as $1.75 billion from the country’s foreign currency reserves to support the ruble, buying it on currency markets in an attempt to prop up its price, over the past three days, according to Bloomberg. But it has not halted the slide:
The central bank has a target trading range for the strength of the ruble against the dollar and the euro (which it combines into a single figure) that, if breached, will cause it to intervene in currency markets. However, that target has been shifting in recent days due to the record falls moving from 35.50-44.50 on Friday to around 35.65-44.65 on Tuesday. The numbers represent the amount of putative rubles needed to buy dollars or euros.
The central bank is due to officially review the range again today.
So far, burning through more of the country’s reserves has done little to support the currency as grim economic forecasts, sliding oil prices, rising inflation and sanctions over the crisis in Ukraine have all taken their toll. Investors are selling their rubles for other currencies because they don’t like those risks. With Russia currently holding over $400 billion in foreign currency reserves, however, this game of chicken with currency markets — in which investors sell the ruble while Russia buys it in hopes of staving off further collapse — is likely to continue.