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. Last Updated: 07/27/2016

Ruble Descends to New Low of 26.84

The Russian ruble slipped to a new low of 26.84 per dollar Monday, shedding 10 kopeks as banks awash with rubles hunted for dollars ahead of a parliamentary election and the end of the year, dealers said.

The Central Bank set its official next day exchange rate at 26.84 rubles per dollar after a previous 26.74.

As usual, this was based on the average rate in the morning unified trading session of eight exchanges, which was 26.8418 after a previous 26.7408. Trade volume was an average $123.66 million.

The ruble lost 32 kopeks last week, with the Central Bank giving only limited support.

"It [the ruble fall] is difficult to explain by any other factor than ruble galore, a coming holiday and the election," said Vladimir Zavershinsky, head of the hard currency department at Moskomprivatbank.

But dealers said the ruble was likely to strengthen in coming weeks on higher dollar supplies from households, banks seeking to balance their books by the end of the year and to transfer money early due to fears of the millennium bug.

Russia will hold a parliamentary election on Dec. 19. Zavershinsky said a high ruble liquidity was typical at the start of the month after wages and pensions had been paid.

Russia is also celebrating Constitution Day next Monday, and banks were trying to stock up on dollars before the holiday while the ruble was cheap, Zavershinsky said.

Another dealer said Central Bank support was insignificant, estimating it at between $20 million and $30 million.

Zavershinsky said the ruble was likely to fluctuate in the 26.80 to 26.90 per dollar range this week.

"If there is a moment when 27 [per dollar] is touched, I think there will be both market resistance and Central Bank resistance. That is why I think the 27 level is unlikely to be broken."

"The dollar is quite comfortable at the current level," he said.

Zavershinsky said New Year and Christmas buying would supply the market with more dollars from households, while another dealer said banks, fearing the Y2K problem, would try to transfer as much as possible to the Central Bank.

Central Bank Chairman Viktor Gerashchenko has said he expected the ruble to end the year at around 27 per dollar. He said later that he "would not eat his hat" if it fell to 28, although he saw no economic justification for this.