The ruble made gains against the dollar and the euro on Wednesday after the Russian government pledged to defend the currency, which had plummeted to record lows earlier this week.
It took 61.7 rubles to buy a dollar on the Moscow stock exchange in late trading, 5.8 rubles less than late Tuesday. The euro traded at almost 77.5 rubles, 7.6 rubles less than the day before. Earlier in the day, the Russian currency fluctuated between losses and gains.
On Tuesday, the ruble crashed dramatically, with a dollar temporarily costing more than 80 and a euro more than 100 rubles. The collapse came despite a dramatic 6.5 percent interest-rate hike to 17 percent by Russia’s central bank.
Wednesday’s rise came on the heels of pledges by authorities that they would not allow more instability. The ruble has lost more than half of its value against the dollar since the beginning of the year.
Putin spokesman Dmitry Peskov said that measures would be put to work to reduce negative effects for the population. “There is reason for cautious optimism,” he said on state media.
Alexei Moiseyev, a deputy finance minister, said earlier that the government would sell foreign currency “as much and as long as necessary” in the face of the ruble’s instability.
The Finance Ministry said that it has 7 billion dollars in cash. Russia’s overall foreign-currency reserves as of December 5 were $416 billion, according to official central-bank data.
Prime Minister Dmitry Medvedev said that, while low oil prices and Western sanctions have taken their toll, the central problem is that the ruble was undervalued.
“The figures we saw at exchange offices in the last days do not reflect the real picture,” Medvedev told a meeting with government officials and business leaders.
Medvedev said that the government and the Central Bank of Russia had worked out a program to stabilize the situation.
“There are enough foreign-currency reserves … And there are market instruments to stimulate demand,” he said. However, he added that introducing capital controls “makes no sense.”
The economic turmoil comes at a time of heightened tensions between Moscow and the West over the crisis in Ukraine. The EU and the U.S. this summer imposed sanctions on large Russian banks, which effectively barred the state and much of the private sector from accessing Western credit markets.
Analysts say that while the sanctions have contributed to the current woes, low oil prices and a failure to diversify Russia’s resource-oriented economy lie at the heart of the problem.
The Russian economy is likely to be discussed by EU leaders when they meet in Brussels on Thursday, diplomats said.
“We see the impact it is having on the markets in Europe, so it merits a political discussion,” one diplomat said on condition of anonymity.
The EU is expected on Thursday to finalize the latest round of sanctions that targets investments in Crimea as part of the decision not to recognize Russia’s annexation of the Ukrainian peninsula.