Ruble up as data indicate Russian recession eases

The ruble surge follows an increase in the price of oil to $64 per barrel.

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July 21, 2009 06:32
1 minute read.

 
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Russia's ruble rose significantly Monday against the dollar, spurred by higher oil prices and upbeat data suggesting the country may be past the fiercest phase of its recession. The ruble was up 3.2 percent against the dollar in afternoon trading before closing 1.9% up, at 31.2 rubles on the MICEX exchange. It also strengthened by 1% against the euro. The surge followed an increase in the price of oil to $64 per barrel. Russia economy, and the ruble, depend heavily on oil and gas exports. Sentiment was also helped by stronger economic statistics. Capital investment jumped 11.8% in June from the previous month, the Federal Statistics Agency said, a sign that investors have regained some confidence in the country's economic stability. Capital flight had badly hurt the Russian economy, exacerbating the effects of the global credit crunch. Compared with June last year, though, investment was still down 20.1%. Other statistics released Monday also indicated that Russia's economy may have reached its lowest point. Real disposable income rose 3.7% month-on-month and was down 1% year-on-year. Retail sales grew 2.4%. The jobless rate shrank to 8.3% in June, the lowest level since December's 7.7%, although analysts said this could largely be explained by seasonal factors. Unemployment peaked at 9.5%, or 7 million people, earlier this year. Yulia Tsyplyaeva, chief economist at Merrill Lynch in Moscow, said the overall improvement in June's statistics showed the economy was stabilizing. "We should not expect this sharp decline to continue, and there are certain signs of recovery," she said. Russia has been weathering its worst recession in a decade following a crash in commodity prices, flagging foreign investment and a squeeze on credit markets. Gross domestic product dropped 10.1% in the first half of the year, with the government forecasting an 8% to 8.5% decline for the year.

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