Central Bank Sticks to Its Devaluation Track

The Central Bank allowed this month's eighth mini devaluation of the ruble on Friday, a day after the country's main export earner, oil, neared $30 per barrel, the lowest level since 2004.

The collapse of oil and other commodity prices coupled with the global economic slowdown and capital flight from emerging markets has turned the ruble around to a depreciation bet in less than six months.

Dealers estimate the bank has spent around $10 billion supporting the currency in this week alone.

Faced with an economy potentially heading for its first recession in a decade, the Central Bank started on a gradual depreciation six weeks ago to preserve reserves -- still the world's third-largest at $451 billion.

Alexei Ulyukayev, a first deputy chairman of the Central Bank who is seen as the country's key forex policy maker, said he would not alter his policy of allowing the ruble to weaken gradually, ruling out a one-off devaluation.

The ruble has weakened versus the euro-dollar basket by almost 13 percent since the bank started its mild ruble devaluation in September.

The ruble eased beyond 29 per dollar on Friday, the weakest level in four years, and was traded at around 41 per euro, the weakest level ever.

The Economic Development Ministry sees the ruble rate at around 31 to 32 per dollar next year, but Central Bank executives say they dislike the forecast and the rate will depend on the euro/dollar rate as well as the oil price.