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. Last Updated: 07/27/2016

As World Oil Prices Drop the Ruble Remains Firm

APThe NYMEX trading floor Tuesday, where the price of oil slipped below $55.
Oil fell over $1 to below $55 on Wednesday, threatening a repeat of the previous day's rout, but analysts are confident that the Central Bank will manage to maintain the ruble under control.

The price of crude fell for a second day on the New York Mercantile Exchange on a steep rise in heating oil stocks in top consumer the United States and signs that Russia may resume pumping crude to Europe has helped to keep oil prices down.

"We're seeing technical weakness combined with the deal between Russia and Belarus pulling prices down, but we're waiting for the inventory data to get a better read of fundamentals," said Phil Flynn, an analyst at Alaron Trading.

However, despite lower oil prices and the pipeline row with Belarus, the Central Bank may find it easier to manage the exchange rate, dealers and analysts said Wednesday.

"An oil price fall normally hits the currency market in a second wave after stocks as players withdraw from the market," said a trader at Metalloinvest Bank, the second-biggest player by volume on the MICEX exchange.

The Central Bank runs a managed float of the ruble, keeping it stable against a dollar-euro basket set up in February 2005. The ruble traded at 29.67 to the basket Wednesday.

In an environment of rising oil prices, the bank has to print rubles constantly to buy foreign currency that exporters bring to Russia to pay salaries and taxes.

Analysts said falling international oil prices might make it even easier for the Central Bank to control the currency.

"A lower oil price makes Russian currency market less volatile, it means it is easier for the Central Bank to carry out its policy," said Yevgeny Nadorshin, an analyst at Trust bank.