Russia staged the second mini rouble devaluation of the year this morning, the 14th such move in around two months, as it adjusted the exchange rate to reflect weak oil prices and the prospects of an economic recession.
Analysts said Russia's gas row with Ukraine - and Europe's calls for diversifying gas supply - called future gas revenue into question and added pressure on the currency, due to the economy's heavy focus on export of natural resources.
The rouble weakened as far as 35.78 versus a euro-dollar basket, breaching the 35.30 level seen as the central bank support the previous day. A source at the central bank confirmed the rouble's trading corridor had been widened.
The currency has now lost nearly 3 per cent in the first two trading days of 2009, building on a fall of 17 per cent in 2008. It still has a long way to go to catch up with oil, a key export for Russia which lost over half its value last year.
"The slowdown in the economy further adds to the depreciation pressure, but I think the main reason for the currency going weaker is the ... oil price, the global rise in risk aversion - therefore investors are less keen to invest their money in Russia - and now also this gas factor," said Ulrich Leuchtmann, analyst at Commerzbank Corporates & Markets in Frankfurt.
"Everybody is arguing for a more diverse supply of gas, less dependency on Russian gas. Therefore this will have an effect in the long run and the FX market is estimating it even now."
The dollar rose to 31 roubles, its highest in 5-1/2 years, while the euro edged up towards a late-December record high of 42 roubles.
Mindful of the 1998 financial crisis - the year when the rouble lost around 70 per cent of its value - Russians have been shifting money into euros and dollars, thus adding further pressure onto the national currency.
Analysts expect negative growth this quarter and next, while Purchasing Managers Indexes suggest that contraction - Russia's first in a decade - has already started in December.
Reuters