Russian ruble recovers losses

Russia's embattled ruble appeared to be regaining some of its catastrophic losses in early trading today, boosted by the finance ministry's announcement that it is about to intervene to support the currency.
Deputy Finance Minister Alexei Moiseyev was quoted by the Interfax news agency as saying that it is going to sell foreign currency from its treasury accounts "as much as necessary and as long as necessary."
The ruble lost over 15 percent of its value this week despite yesterday's massive interest rate hike by the Russian central bank and was at some point more than 20 per cent down yesterday.

The world's worst-performing currency along with the Ukrainian hryvnia, the ruble has lost more than 50 per cent of its value this year. After posting some fresh losses at the opening, the ruble reversed its fall an hour into the trading and was up 5 per cent at 64 rubles at 11.15 a.M. Moscow time (0815 GMT).
The moderate rise in the ruble was further spurred by the finance ministry's announcement that it believes the ruble to be "undervalued" and is about to begin selling currency on the market.
The ruble has fallen sharply in recent weeks and is down more than 50 per cent since January, due to sinking oil prices as well as the impact of Western sanctions imposed over Russia's involvement in Ukraine's crisis.

The fell dramatically on Tuesday despite the Central Bank's middle-of-the-night decision on Tuesday to raise the rate to 17 per cent from 10.5 per cent.

"This is a very dangerous situation, we are just a few away from a full-blown run on the banks," Russia's leading business daily Vedomosti said in an editorial today.
"If one does not calm down the currency market right now, the banking system will need robust emergency care."
The move is intended to make it more attractive for currency traders to hold onto their rubles. Doing so gives them a major return in comparison to many other currencies where interest rate returns are near zero percent.

Other options available to the Russian authorities to stem the selling tide could be imposing capital controls or actual intervention in the markets buying rubles, for example.
Russia's Economic Development Minister Alexei Ulyukayev yesterday denied that the government was considering imposing capital controls but said that the rate hike came too late.
The collapse of the national currency triggered a spending spree by Russians desperate to buy cars and home appliances before prices shoot higher. Several car dealership were reported to have suspended sales, unsure how far down the ruble will go, while Apple halted all online sales in Russia.