Ruble falls below bank's target rate

By Emma O'Brien  |   2009-2-3  |     NEWSPAPER EDITION

RUSSIA'S ruble weakened to below the central bank's target exchange rate of 36 per United States dollar, less than two weeks after Chairman Sergey Ignatiev widened the trading band and pledged reserves to defend the new level.

The ruble lost as much as 1.7 percent to 36.3550 per US dollar, the weakest since January 1998, Bloomberg News said.

Ignatiev said on January 22 that Bank Rossii would protect the currency at a level of 41 against its basket of dollars and euros, which translates to 36 per US dollar. A Bank Rossii spokesman declined to comment.

"The pace of the move to the target is definitely going to be a source of concern to the central bank," said Martin Blum, head of emerging-market economics and currency strategy at UniCredit SpA in Vienna. "Global risk appetite is continuing to deteriorate so the pressures on the ruble will continue."

The ruble has slumped 35 percent against the US dollar since August as a 63-percent plunge in Urals crude oil prices and the worst global economic crisis since the Great Depression spurred local residents and investors to withdraw about US$290 billion from the country, according to BNP Paribas SA.