Rouble plunges 2.3pc

As the ruble is hitting its lowest levels since late January, analysts also expect the central bank to take a pause in the monetary easing cycle because of higher inflationary risks.

Russia’s Ministry of Economic Development on Tuesday downgraded its forecast for the country’s gross domestic product (GDP) this year to a 3.3 percent decrease, down from a previous estimated decline of 2.8 percent. Adding to the pain, Foreign Minister Sergei Lavrov said Monday that U.S. and European sanctions over the conflict in Ukraine will stay in place for a “very long” time. According to the minister, IMF’s 0.2 percent growth forecast for Russian Federation is too pessimistic.

Oil prices have fallen to their lowest point in six years, causing huge problems for the Russian currency.

The Russian ruble has plunged 2.3 percent to hit a seven-month low amid a further drop in oil prices, the country’s key export.

Inflation rose to a vertiginous 15.6 percent last month, shrinking Russians’ purchasing power. Barclays is maintaining its forecast for a contraction of 4 percent this year for now, he said. “We are lying somewhere on the bottom”, Ulyukayev said, according to RIA news agency. It is imperative to state that the Russian government has budgeted all of its spending on an estimated oil price of $50 a barrel. Before improving its estimates in May, after a short period of currency stabilization, the ministry lowered its projections in February after the ruble’s worst crisis since 1998.