Russia's ruble crashes 10% to a new record low as the US and Europe consider a ban on its energy exports
- The ruble fell to a fresh record low on news the US and allies are considering an import ban on Russian oil.
- It was trading at seven-tenths of 1 cent, or about 135 to the dollar, and is now down 38% year to date.
Russia's currency, the ruble, fell to a fresh record low Monday thanks to concerns that a potential US oil embargo could crush the country's economy.
The ruble fell 10% to as low as 135.49 against the dollar, after the US and its allies discussed further retaliation against Russia's invasion of Ukraine via a ban on imports of its oil.
That level puts 1 ruble at seven-tenths of 1 cent, or $0.0073. The Russian currency is now down 38% this year so far, but the decline is not as severe as during the 1998 Russian financial crisis, when it plunged 70%.
News of a potential ban on Russian oil imports by Europe and the US has "severely impacted the currency," according to Walid Koudmani, chief market analyst at financial brokerage XTB. He said the country continues to be more economically isolated and may have to search for alternative export destinations for its oil.
Secretary of State Antony Blinken said Sunday that the US and its European partners are in "active discussions" about banning Russian oil imports while maintaining a steady global supply of the commodity.
Western allies have so far been reluctant to ban oil imports from Russia, given it could result in increased energy costs for consumers. But pressure has been mounting on policymakers to prohibit imports in response to the aggression ordered by Russian President Vladimir Putin in Ukraine.
Putin described Western sanctions as a declaration of war on Saturday, saying "Thank God it has not come to that."
US House Speaker Nancy Pelosi has supported such a measure. "Ban the oil coming from Russia," she told reporters Thursday. "I'm all for that — ban it."
On Sunday, Moody's cut Russia's credit rating to its second-lowest status of "Ca," which means securities in the country are likely or very near a default. That is seen as another factor contributing to the ruble's latest decline.
Last week, the ruble plunged 30% in response to previous sanctions imposed by Western nations, as international investors and foreign companies quickly distanced themselves from Russian investments.
In an effort to avoid the collapse of the ruble, Russia's central bank has more than doubled interest rates to 20%. But the move doesn't seem to have shielded the currency from further free-fall.
Moscow's stock exchange was closed all last week on the orders of the central bank, and no trading will take place until Wednesday, it said Friday. That will mark its longest market closure ever.