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. Last Updated: 07/27/2016

Klepach Says Ruble's Rise Threatening Economy

MOSCOW — A senior government official warned Wednesday that the rapid strengthening of the ruble could undermine the country's economic recovery, according to news reports.

The ruble has gained nearly 10 percent of its value against the dollar since early September on higher crude prices and a broader weakening of the U.S. dollar. 
Oil prices, which are crucial to Russia's energy exporting economy, reached $77 per barrel on Wednesday.

But while higher crude prices help the country's energy exports, they cause the ruble's value to rise — hurting other kinds of exports. Deputy Economic Development Minister Andrei Klepach warned that oil prices of more than $80 per barrel next year could see the dollar trade as low as 23 rubles to 26 rubles.

This could be "quite dangerous for the economic recovery," Klepach said, according to Interfax. 
A stronger ruble has helped battle inflation by making imports cheaper. But most Russian companies push for a weaker ruble that could make their exports more competitive internationally.

The recent rise in the ruble has prompted the Central Bank to intervene to contain the pace of its appreciation. On Tuesday alone, the Central Bank reportedly bought $1.5 billion to keep the ruble from rising sharply.

The country's economic output was down 9.4 percent in the third quarter compared to a year ago, but it rose 0.6 percent on a seasonally adjusted basis against the previous quarter, according to the Economic Development Ministry. Industrial production grew 5.1 percent in September.