Sanctions, cheap oil take toll on Russia’s struggling currency – Part 1

Read the Full Transcript

  • JUDY WOODRUFF:

    Now: why economic alarm is building inside Russia, as the country's Central Bank made a dramatic move to stabilize the economy.

    The Russian currency, the ruble, still declined for much of this day, before recovering some in late trading.

    Jeffrey Brown has the story.

  • JEFFREY BROWN:

    Moscow banks nervously charted the ruble's course, hours after an extraordinary move by Russia's Central Bank. It hiked a key interest rate nearly seven points, to 17 percent, in a desperate bid to shore up the currency.

    ELVIRA NABIULLINA, Governor, Central Bank of Russia (through interpreter): Without a doubt, the situation is really very difficult, and it requires absolutely coordinated actions of the government and the Central Bank. And we are ready for such coordination.

  • JEFFREY BROWN:

    Since January, the ruble has lost 60 percent of its value, fueling inflation, and leaving many on the streets of Moscow feeling the pinch.

  • WOMAN (through interpreter):

    Prices are rising for us at a faster rate than our pensions. It is bad. It is bad for us.

  • MAN (through interpreter):

    Look how the price of bread has risen, and I'm not talking about a little rise. The situation is very difficult.

  • JEFFREY BROWN:

    The plunging price of oil, one of Russia's main exports, has been a primary driver in the currency's devaluation. Today, officials at the Moscow Stock Exchange voiced doubt that oil will turn around soon.

  • ANDREY SHEMETOV, Deputy Chairman, Moscow Exchange (through interpreter):

    In such an unstable and volatile atmosphere, it seems to me that panic prevails, which is not good. Naturally, at some point, it could reverse with the same speed, but at this moment, the mood in the market is not very positive.

  • JEFFREY BROWN:

    Western sanctions imposed over the Kremlin's actions in Ukraine are also weighing on the ruble and the Russian economy.

    Even so, President Vladimir Putin has sounded defiant.

  • PRESIDENT VLADIMIR PUTIN, Russia (through interpreter):

    The modern world is very interdependent, but this doesn't mean the sanctions against Moscow and a sharp drop in the prices of energy commodities and the national currency devaluation will have negative results or catastrophic consequences only for us. Nothing like that will happen.

  • JEFFREY BROWN:

    But another setback is coming. The White House confirmed today that President Obama will sign a new round of sanctions into law later this week.

Listen to this Segment