Falling Oil Prices Drag Ruble Down
- New Europe Investor
- January 06, 2016
With global oil prices dropping further, Russia’s currency has begun to fall in value again.
Today, crude oil prices dropped to a low not seen since 2004, at $34.65. Russia’s currency has fallen in value to the euro also.
It is currently 80 rubles to the euro. Two years ago, it was 45 rubles to the euro.
The instability between Saudi Arabia and Iran has led to the belief that negotiations between the two countries on restricting oil supply is unlikely. Many oil producers (including Russia), are currently flooding the market seeking further revenues to compensate for the lower prices, thus suppressing the market price further.
Other factors such as a slow down of the Chinese economy are impacting the demand side.
The effect of all of this on the commodity dependent, Russian economy is huge. The decline in the ruble is just another symptom of this.