MOSCOW — Russian stock markets and the ruble fell further on Monday as the currency edged closer to a historic low on the back of a fresh slump in oil prices. The ruble dropped at the start of trading to 78.85 to the U.S. dollar, nearing its record of just over 80 that it hit when the currency tumbled dramatically in December 2014. Russia’s dollar-denominated RTS index fell by some 2.96 percent in early trading by around 07:20 GMT, meaning that it has shed some 16 percent since the start of the year.
Russia — whose energy-reliant economy has already been pushed into recession by low oil prices and Western sanctions over Ukraine — has been rocked again by a further slump in prices. A barrel of Brent crude dropped briefly below US$28 on fears of oversupply after the international sanctions on Iran over its nuclear program were lifted.
“Oil is a key driving force at the moment, and if its slide continues, the FX market will continue adjusting,” analysts at Russia’s VTB bank said in a statement.
Russia relies on oil and gas for over half of its budget revenues and the fresh slump in prices has already seen the government target major spending cuts as it seeks to rein in a potential deficit.