The Russian ruble plunged 2.3 percent on Monday due to a large drop in oil prices, the country’s principal export. The ruble now sits at a seven-month low, severely complicating president Vladimir Putin’s plans for global aggression.
The ruble traded at 70.7 to the dollar in early trading in Moscow, hit by a combination of low energy prices and biting Western sanctions that are now being felt far and wide with Russia. The sanctions have been made even worse by Putin’s ban on western food products and luxury goods.
Oil is the main engine of the Russian economy and its decline follows a sharp decline in the price of crude oil.
U.S. oil contracts on Friday dropped to under $40 per barrel, the first time at such levels since 2009.
Despite obvious signs of distress, Russian officials continue to insist that the economy is strong enough to weather the sharp declines.
On Monday, Economic Development Minister Alexei Ulyukayev said to reporters that he did not expect the price of oil to stay below $40 a barrel.
This is a convenient assumption given that the Russian government has budgeted all of its spending on an forecasted oil price of $50 per barrel.
Russian stocks clearly do not believe the government, with the benchmark MICEX index down roughly 2 percent on Monday.
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