Russian ruble plunges to new record low against euro

The Russian ruble plunged further in initial trading on Wednesday, hitting yet another record low value against the euro. The ruble dropped below 49.0 to the euro for the first time, to show a fall of 8.0 percent so far this year. The euro was buying 49.01 rubles, having reached 49.0490 at one point. The dollar rose to 35.61 rubles, having reached 35.6425 in initial trading, the highest level since 2009. The currency weakened sharply late on Tuesday when the finance ministry announced that it had bought foreign currency to bolster its anti-crisis reserves. The latest lurch of weakness continued when trading opened on Wednesday amid signs of growing concern among Russians who have experienced several hard-hitting devaluations since the collapse of the Soviet Union. On Friday, the central bank said that it was prepared to raise interest rates if the fall of the ruble increased inflationary pressures significantly. Russia is being affected by a change of direction in US monetary policy which has undermined the currencies of several emerging economies, in Turkey, Brazil and South Africa for example, although each country has its own specific economic weaknesses, analysts say. US policy, in winding down monetary stimulus for the US econmy, is having the effect of sucking some capital back from emerging economies, highlighting any structural weaknesses in those markets. Economists are sceptical about how much room for manoeuvre is open to the Russian authorities, warning that an increase in official interest rates could stifle any much-needed recovery of growth. Growth of the Russian economy slowed down sharply to 1.3 percent in 2013 from 3.4 percent in 2012 and 4.3 percent in 2011. Economic indicators so far this year suggest that the economy is stuck in this state of near stagnation.