SHAFAQNA – Oil prices continued to slide on Tuesday, while the ruble jumped against the dollar after Russia sharply hiked its benchmark interest rate to halt a collapse in its currency.
The dour mood kept equities down in Asia, with MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS down 0.1 percent in early trade.
The Russian central bank raised its key interest rate to 17 percent from 10.5 percent, in a move it said was aimed at curbing increased devaluation and inflationary risks.
Sales of oil and gas are Russia’s chief source of export revenue, while tougher U.S. sanctions on Moscow, which were set out in a bill passed by U.S. Congress Friday, added to Russia’s economic woes.
The ruble RUB=EBS weakened beyond 60 rubles per dollar, after rising above 67.00 at one point on Monday when oil prices fell sharply. The dollar was last up 13.2 percent against the rouble to trade at 65.9 rubles per dollar.
“The bottom line is that oil prices have to stabilize for the rouble to find a bottom but this move is what the central bank should be doing,” said Jorge Mariscal, chief investment officer for emerging markets at UBS Wealth Management in New York.
Crude prices remained under pressure on Tuesday after OPEC once again said it will not cut oil output despite fears of massive oversupply, and a UAE official nixed holding an emergency meeting of the producer group to support prices. [O/R]
U.S. crude CLc1 was down 0.3 percent in early Asian trade at $55.73 a barrel, after touching a fresh May 2009 low of $55.02 on Monday.
Risk-aversion pushed the dollar lower against the safe-haven yen. The dollar was down about 0.1 percent on the day at 117.74 yen JPY=, approaching a low of 117.44 yen touched last Thursday, and moving further away from its seven-year high of 121.86 yen set on Dec. 8.
The euro EUR= was last up about 0.1 percent against the dollar at $1.2445.
Investors are now awaiting the U.S. Federal Reserve’s final meeting of 2014 on Tuesday and Wednesday with a statement and forecasts expected Wednesday at 2:00 p.m. EST (1900 GMT), followed by Fed chief Janet Yellen’s press conference half an hour later.