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Russian ruble crashes

Government may draw on national reserve fund to keep economy from collapse.

By Daniel J. Graeber
Russian ruble crashes
Putin's Russia faltering amid declining oil prices and sanctions targeting its energy sector. (UPI Photo/Anatoli Zhdanov) | License Photo

MOSCOW, Dec. 3 (UPI) -- A day after the Russian government warned of a pending recession, its currency Wednesday sunk to a new low amid cheap oil prices and sanctions pressure.

By midday in Moscow, the Russian currency hit bottom with trade at 52.8 rubles to the U.S. dollar, besting the previous low by more than 13 percent.

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The devaluation comes one day after rRussian Deputy Economy Minister Alexei Vedev said the government revised the outlook for the economy next year, downgrading from an initial expectation of 1.2 percent growth to around 0.8 percent.

Exports of crude oil, petroleum products and natural gas accounted for 68 percent of all export revenues for Russia in 2013. The declining price of crude oil, coupled with Western economic sanctions targeting Russian energy, is largely to blame for stagnation in the Russian economy.

The Central Bank of Russia said Wednesday it was making foreign currency interventions in an effort to slow the crash on the national currency, the ruble. The office of the Prosecutor General in Moscow said, meanwhile, it was looking into bank operations after a member of the State Duma's Budget and Tax Committee accused the CBR as acting as an "enemy of the country."

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Tatyana Nesterenko, Russia's first deputy finance minister, said the Kremlin might be forced to draw on a national reserve fund in an effort to counter the currency devaluation and the drop in crude oil prices.

"In terms of budget policy, there are risks," she said.

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