The Russian ruble tumbled to new record lows Monday despite repeated interventions by the central bank to keep the national currency afloat.
The ruble broke through level of 60 to the dollar and 75 to the euro for the first time, hitting 61.25 to the greenback and 76.10 to the European single currency in afternoon trading.
The slump came even though the Central Bank has spent nearly $6 billion so far this month on market interventions to slow the ruble’s slide.
Russian agencies said the dollar jumped from 61 back to 60 at around 1300 GMT, possibly due to the latest intervention.
The bank made interventions every day last week, and on Thursday decided to hike its key rate by one percentage point to 10.5 percent.
Central Bank chief Elvira Nabiullina said last week that the bank is prepared to spend up to $85 billion over the next year to prop up the ruble if necessary.
The ruble’s depreciation continued through the weekend however, pulled down by a global slump in oil prices and the effect of Western sanctions imposed over Moscow’s annexation of Crimea and its role in eastern Ukraine.
“During a crisis like the one Russia is experiencing now, only changing expectations can lead to stabilisation,” economist Maxim Buyev wrote in the Vedomosti daily to explain the seemingly unstoppable slide of the national currency.
“The government must offer a clear plan of reforms,” he added.
Vedomosti further reported Monday that the government plans to cut budget spending by 10 percent in 2015. The cuts would impact transportation programs as well as spending on space, aviation and development of the Far East, the report said.
Creeping inflation has already led even the bread industry to prepare for 10 percent price hikes for the politically sensitive product, Russian media reported last week.
The Russian economy is set to contract next year. The World Bank said last week that its forecast of a 0.7 percent contraction is based on a scenario where crude oil is at $78, and that the economy will shrink by 1.5 percent if the price is $70.
The 2015 budget is balanced on the assumption of selling oil at $95 per barrel — a price well above the current level hovering around $60.
The ruble’s continuing slide has led to “a growing sense that the currency crisis is spiralling out of control” and increasing speculation that government could undertake stricter measures like capital controls, said Neil Shearing, chief emerging markets economist at London-based Capital Economics.
“In the absence of an improvement in relations with the West and a lifting of the economic and financial sanctions on Russia, the appeal of capital controls and external debt default will grow,” he said.