The ruble has continued to slide even after Russia’s Central Bank sought to ease the selling pressure on the currency following the drop in oil prices by raising interest rates again.
The Central Bank raised its key interest rate by a percentage point to 10.5%, citing an increasing rise in consumer prices and “significant inflation risks”.
The bank said inflation is expected to hit 10% for 2014 and rise further in the first quarter of 2015.
Despite the increase, the ruble remained under pressure. The currency broke above 55 rubles to the US dollar for the first time ever as it struck its new all-time low of 55.45.
And against the euro, it was heading toward the 70 ruble threshold for the first time. In early afternoon trading, it hit 68.99 rubles to the euro before recovering slightly.
The ruble has lost about 42% of its value since January, battered by Western sanctions imposed over the conflict in eastern Ukraine and the drop in the price of oil, the backbone of the Russian economy.
The Central Bank said it would continue to raise its key rate “in the case of further aggravation of inflation risks”.
The Russian economy is unlikely to see any growth in 2015 or 2016, the bank said.
The Russian government recently revised its economic forecast for next year, predicting a drop of 0.8% instead of 1.2% growth.
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