UPDATE2: Russian ruble sinks to 85 vs dollar, 93 vs euro, new all-time lows

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MOSCOW/DAVOS, Switzerland, Jan 21 (PRIME) -- The exchange rate of the Russian ruble declined further to new all-time lows on Thursday, depreciating by 4.39 rubles to 85.79 against the U.S. dollar and by 4.8 rubles to 93.45 against the euro at 12:08 p.m. Moscow time, as seen by PRIME in data of the Moscow Exchange.

Earlier, the national currency tested 85.999 against the dollar and 93.7 against the euro.

“The exchange rate changes indeed, the exchange rate is volatile. But it is not exactly a collapse, and in this case there are no grounds to believe that the central bank has no scenarios aimed at eliminating some really slumping changes,” Dmitry Peskov, spokesman for Russian President Vladimir Putin, said.

Former Finance Minister Alexei Kudrin said that the ruble rate dynamics are driven only by the current oil price weakening. “I am sure that the central bank does not pursue an intentional policy of ruble devaluation… The central bank must maintain a floating exchange rate regime that means that the rate will follow objective market conditions. In this case it is an oil price fall,” he said in an interview with Business FM radio station.

March futures for Brent crude oil fell 1.88% to $27.36 per barrel, according to data of the ICE trading platform.

BANKER’S VIEW

Sberbank and VTB Bank, the country’s two largest banks, see no panic or excessive demand for foreign currency among their clients, according to separate statements by Sberbank and VTB Bank CEO Andrei Kostin.

Kostin said the central bank’s key rate of 11% corresponds to the current economic conditions and the authority is unlikely to reduce it soon. “The central bank keeps its trend towards reducing the rate in the course of 2016, but probably during the near future – weeks or months – amid such high volatility it will forbear from decreasing (it).”

In December 2014, the central bank raised the key rate to 17% on the back of the ruble devaluation, after that the regulator gradually reduced it to 11% in August 2015.

Kostin also said he believes that the central bank “will do try to smooth abrupt jumps (in the ruble’s exchange rate).”

In 2016, the ruble will remain weak and is unlikely to strengthen significantly, Kostin also said.

MINISTRY: RUBLE TO STABILIZE SOON

Spokeswoman for the Economic Development Ministry Yelena Lashkina said that the ministry expects the ruble to see a correction soon, “Such a sharp fall cannot continue for a long time. We will likely see a correction soon,” she said.

According to a forecast of the ministry, the ruble will stand at 63.3 against the dollar on average in 2016.

The authority has no plans to revise the forecast urgently and may consider it in April, Lashkina said.

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