As the freshly waged oil price war by Saudi Arabia against Russia threatens to turn into another serious challenge for Russia’s energy-based economy, the country’s authorities were quick to send messages reassuring they are up to the task, Daily Sabah writes.
While Russian markets were closed following International Women’s Day, the value of the ruble on the online exchange Forex plummeted on Monday, leaving the Russian currency at 75 per dollar and 85 per euro. When the Moscow Exchange closed on Friday, it only took 68 rubles to buy a dollar and 80 to buy a euro. The prices of Russian stocks on the London Stock Exchange also took a nosedive today.
Finance Minister Anton Siluanov said on Monday at a government meeting chaired by Prime Minister Mikhail Mishustin that Russia’s resources make it possible to guarantee the implementation of “all social liabilities of the state even in conditions of continuing low oil prices”.
The prime minister on Monday held a government meeting on measures to preserve stability of the Russian economy. Siluanov’s statement followed similar calming messages by officials during the day.
The Finance Ministry said in a separate statement that the liquid funds of Russia’s National Wealth Fund totaled 10.1 trillion rubles ($138.8 bln) as of March 1, which is sufficient for covering the country’s shortfall in revenue related to the oil price plunge to $25-30 per barrel within 6-10 years
The cost of oil fell by 25 percent, the largest single-day change in the twenty-first century so far. Brent brand oil now costs less than $35 per barrel, bringing the price of oil below Russia’s budgetary rule — the lowest price officials assume when composing the country’s federal budget. This means the Russian government has shifted from accumulating reserves to spending them.
However, the cause of the current price drop is also at Russia’s feet: the government refused to support OPEC countries in their proposal to cut down oil extraction in order to stabilize prices. According to analysts, it is likely that the ruble’s current decline will continue, but how long the currency’s value continues to fall will depend on the length and severity of the global coronavirus outbreak.