Russia's rouble has hit a new all-time low versus the dollar. As Sonia Legg reports it breaches the central bank's trading band, implying the bank has intervened once more to defend the currency.
The rout started last week and continued as Russian markets opened this week. And it wasn't long before the rouble hit another all-time low against the dollar - this time also breaking through the psychologically important 40 level. Dmitry Polevoy is Chief Russia Economist at ING Eurasia. (SOUNDBITE) (English) CHIEF ECONOMIST ON RUSSIA AND CIS AT ING EURASIA, DMITRY POLEVOY, SAYING: "All these quite significant rouble weakening were mostly related to sanctions story, to concerns about the negative effects for the Russian economy and for corporate's ability again to pay out the external debt. But at the same time now the sanctions issue has somewhat stabilised and therefore the next factor the market is looking at is this falling oil prices." Russia has plenty of cash reserves but the oil price is adding an extra dimension. And with inflation at 8% and interest rates at zero the bank has limited options says BGC's Mike Ingram. (SOUNDBITE) (English) MIKE INGRAM, MARKET COMMENTATOR, BGC, SAYING: "There is a feeling that the rouble is going to remain weak - it is certainly not helped by dollar strength, it is certainly not helped by oil prices continuing to slump and of course that is the major earner for the Russian budget - they need to see prices of $110 - $115 a barrel just to balance the books." Putin still retains widespread support in Russia although the economic pain is beginning to hurt ordinary Russians. (SOUNDBITE) (Russian) MOSCOW RESIDENT, ANTON, SAYING: "Everything is getting more expensive. Big companies are slowly starting to cut jobs. Most people don' t feel the difference yet. But those who understand the situation can see what is going on." (SOUNDBITE) (Russian) MOSCOW RESIDENT, ALEXEY, SAYING: "It's for the best. Russia will give up dollar, that's it and will sell oil for roubles". Russian shares didn't reflect the currency's troubles - a recovering risk appetite on global stock markets kept them broadly firm. But while Russian firms remain shut out of international capital markets demand for the dollar is likely to remain high.