Investing.com - The Russian rouble jumped against the dollar and the euro on Monday after the country’s central bank reiterated that it is prepared to intervene in currency markets to support the currency at any time.
USD/RUB was down 3.49% to 45.06, off the record high of 48.61 struck last Thursday.
In a statement, Russia’s central bank said Monday that it had abandoned the rouble’s trading band and would allow the currency to float freely.
The bank added that it would intervene in the foreign exchange market at any time if it saw any threat to financial stability.
The announcement came after the central bank scaled back interventions aimed at supporting the rouble last week.
The central bank hiked interest rates by 1.5% to 9.5% earlier this month in an effort to stem the depreciation of the ruble and curb inflation.
The rouble has fallen by around 25% against the dollar so far this year as ongoing tensions in eastern Ukraine and broad based risk aversion towards Russia, as well as falling oil prices pressured the currency lower.
Sanctions imposed on Russia by the U.S. and the European Union for what they say is its role in backing separatists in eastern Ukraine have weakened the rouble, caused a spike in inflation and have almost completely shut Russian companies out of the global financial markets.
At the same time, the country’s economy has been hit by falling oil prices. Russia is the world’s second-largest oil exporter and half of its budget revenue is financed by taxes on energy exports.
Elsewhere, EUR/RUB dropped 3.03% to 56.34, retreating from Thursday’s all-time highs of 60.27.