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Russia’s Ruble Crashes to Historic Lows as OPEC Lets Oil Price Fall

The ruble dropped sharply on Friday morning, falling to within 10 kopeks of the 50 to the U.S. dollar mark after OPEC’s refusal to implement production cuts caused oil prices to nosedive.

The Russian currency reached 49.9 to the dollar shortly after 10 a.m., extending a dramatic week-long slide that raises the possibility of intervention by the Central Bank to steady the market.

The ruble, which is at record lows, has lost over 10 percent against the dollar since Monday.

The Organization of Petroleum Exporting Countries said Thursday it would not curb output to shore up prices, prompting oil to drop below $72 a barrel, shedding over $5 in a day to trade at four-year-lows.

The price of the international benchmark brent crude Friday morning was about $71.70, having plummeted from a high of $115 this summer.

Russia depends for about half its budget revenues on energy exports, so the falling price of crude has an immediate knock-on effect on the Russian currency and the stock prices of Russian companies.

The ruble has already lost over 30 percent of its value against the dollar this year in the face of weakening oil and Western sanctions on Moscow over the Ukraine crisis.

The Central Bank implemented a free floating currency earlier this month after spending over $70 billion to defend the ruble since January, but has said that it reserves to right to intervene on the market if there is a threat to financial stability.

“The key is the mindset of the Central Bank, and what would be required for it to intervene. Collapsing oil prices justify the ruble’s weakness. However, it is the pace of ruble’s declines and the public’s behavior that we think will govern its decision,” chief currency strategist at Sberbank CIB Tom Levinson said in a note Friday.

The dollar-denominated RTS index, which is particularly badly hit by ruble weakness, sank to five-year lows of 969 points Friday. The ruble-traded MICEX index was flat at 1,532 points