Russian ruble falls 11 percent against the dollar

(AGI) Moscow, Dec 16 - The Russian central bank's attempt tosupport the ruble by raising interest rates to 6.5 basis pointshas done little to prevent the currency's decline against thedollar. After initially rising by 9 percent on Tuesday, theruble plummeted by as much as 20 percent before closing down 11percent. The ruble has decreased over 50 percent against thedollar since the beginning of the year, a drop reminiscent ofthe crisis in 1998, and a heavy blow to Russia's buying power.Moscow's foreign currency reserves may be markedly vaster thanin 1998, but the

(AGI) Moscow, Dec 16 - The Russian central bank's attempt tosupport the ruble by raising interest rates to 6.5 basis pointshas done little to prevent the currency's decline against thedollar. After initially rising by 9 percent on Tuesday, theruble plummeted by as much as 20 percent before closing down 11percent. The ruble has decreased over 50 percent against thedollar since the beginning of the year, a drop reminiscent ofthe crisis in 1998, and a heavy blow to Russia's buying power.Moscow's foreign currency reserves may be markedly vaster thanin 1998, but the nation is still on the verge of a breakdown,with the central bank itself acknowledging that the situationis "critical". The ruble closed at 72.44 dollars after reaching80, and 90.50 euros, a 13 percent drop, after topping at 100.Russia's Deputy Prime Minister, Yuri Trutnev, said the ruble'sdevaluation can be construed positively. "My feeling is that weare not reading the changing situation on financial marketscorrectly. Because the situation on financial markets is onlystimulating Russia's accelerated development", he stated. Thesame financial fluctuations that brought the ruble downincreased the market's risk aversion, bolstering the euro andyen while chipping away at the dollar. The euro closed at1.2510 dollars after peaking at a three-week high of 1.2570dollars. The dollar/yen rate dropped to 116.75, and touched amonthly low of 115.56. The euro/yen rate closed at 146.01 afterdropping to 144.92. The Swiss franc rose as high as 1.2002against the euro. European markets bounced back from thenegative trend caused by the ruble's decline and a new drop inoil prices, thanks to a slight recovery in the oil sector dueto light crude closing higher and the ruble's freefall finallycoming under control. Wall Street also closed higher after anegative start. London rose by 2.28 percent to 6,323.57 points,Milan by 3.27 percent to 18,670.05 points, Frankfurt by 2.39percent to 9,557.09 points, and Paris by 2.12 percent to4,090.42 points. Madrid increased by 1.15 percent. . .