Rouble devalued on gas row pressure

Moscow: Russia let the rouble's value fall yesterday for the second time this year as weak oil prices, the gas row with Ukraine and the prospects of an economic recession kept downward pressure on the currency.

The move, the 14th mini-devaluation in around two months and the second in as many days, keeps up the pace of late December, when the rouble weakened on six of the last 10 trading days.

Russia's gas row with Ukraine - and Europe's calls for diversifying gas supply - has called future gas revenue into question and added to pressure on the currency because of the economy's heavy focus on export of natural resources.

The rouble had weakened to 35.80 versus a euro-dollar basket, breaching the 35.30 level seen as the central bank support the previous day.

The currency has now lost nearly 3 per cent in the first two trading days of 2009, building on a fall of around 16 per cent in 2008.

"The slowdown in the economy further adds to the depreciation pressure, but the main reason for the currency going weaker is the ... oil price, the global rise in risk aversion - therefore investors are less keen to invest their money in Russia - and now also this gas factor," said Ulrich Leuchtmann, analyst at Commerzbank Corporates & Markets in Frankfurt.

See also Page 35