MOSCOW, (Reuters) – The rouble maintained its slide through record lows yesterday, threatening more hardship for ordinary Russians and prompting some to stock up on dollars as the Kremlin denied the currency was collapsing.
Central bank governor Elvira Nabiullina cancelled a visit to the World Economic Forum meeting in the Swiss resort of Davos as the currency, squeezed by Western sanctions and the collapse in the value of Russia’s oil exports, chalked up one of its biggest intraday drops in around a year.
At one point the rouble smashed through 83 per dollar for the first time and weakened as far as 86, though it later recovered some ground.
Russia’s economy shrank an estimated 3.9 percent last year. But the central bank may have to to postpone interest rate cuts to revive growth because many of the products Russians consume are imported and the weakening rouble spurs inflation.
However, a weaker rouble increases the local value of Russia’s energy sales, insulating the government’s budget.
The central bank said it held a meeting with bankers in the evening to encourage lending to businesses and households.
It introduced “forbearance measures” at the end of 2014 to help banks cope with the economic pain, allowing them to use favourable exchange rates when calculating their capital adequacy levels and relaxing rules on how much they must set aside against loan losses.
A source at a major bank said the central bank has not proposed specific steps.
“The (rouble) rate volatility was the main subject of the discussions,” he said, adding that the meeting lasted about an hour and a half and that governor Nabiullina did not attend.
Earlier yesterday the bank said Nabiullina had not gone to Davos.
RBC daily said, citing a government source, that the authorities may revive a practice of advising exporters to sell part of their foreign currency revenues to support the rouble. It also said Nabiullina may have cancelled the Davos visit in order to start negotiations with exporters.
Reuters was not able to independently corroborate the report.
A cashier at an exchange booth on Moscow’s central Tverskaya Street said clients had been buying more hard currency than usual in amounts of around $100.
