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. Last Updated: 07/27/2016

Weakening Ruble Gets Cash Boost

The Central Bank intervened Tuesday to support a weakening ruble and pumped fresh liquidity into the banking system as foreign investors cut their exposure to risky assets in a global credit crunch.

Typically, the Central Bank is seen bidding for dollars as it offsets upward pressure on the ruble stemming from the half a billion dollars a day in petroleum revenues. But this time the Central Bank stepped in as a dollar seller when the ruble eased by over half a percent against the dollar and euro currency basket it targets under its managed float.

"We have just seen the Central Bank on the [dollar] offer at 25.89 rubles to the dollar and things should go back to normal," Andrei Savitsky, currency dealer at Raiffeisen Bank in Moscow, said at midsession.

The ruble's fall wiped out last week's gains and pared back its advance against the currency basket, composed of 55 cents and 45 euro cents, to just 0.6 percent so far this year.

Some market watchers expected the ruble weakness to be short-lived.

"The ruble will come back within the coming days. The Central Bank will make sure of that," said Lars Rasmussen, analyst at Danske Bank.

Economists say the latest capital outflows weighing on the ruble, after record inflows early this year, could offset price pressures. "These outflows could be a blessing in disguise," said Yaroslav Lissovolik, chief economist at Deutsche UFG in Moscow.