KIEV, Ukraine -- Russia's currency plummeted to new lows on Monday, falling more than 6% to almost 54 rubles to the dollar before recovering slightly to around 52 by evening.
The ruble is now down about 42% against the dollar this year, making it the second-worst performing currency in the world behind Ukraine's hryvnia.
The drop on Monday marked the ruble’s worst one-day plunge since the Russian financial crisis of 1998, when the country defaulted on its debt. The struggling economy prompted more than 5,000 Russians in Moscow on Sunday to protest against the government's plans to layoff thousands of doctors and shutter several hospitals.
The #ruble plunged 15% last month, the worst performance after Ukraine’s hryvnia among more than 170 global currencies tracked by Bloomberg.— Jason Corcoran (@jason_corcoran) December 1, 2014
The fall in the value of the ruble is thanks largely to falling oil prices and sanctions imposed by the EU and U.S. related to Russia’s annexation of Crimea and its support of pro-Russian separatists fighting in eastern Ukraine.
As the world's third-largest producer of oil, Russia's economy is inextricably linked to its price, which has dropped roughly 25% since the summer, The Associated Press reported. Oil benchmark Brent crude dropped 3% last Friday and another 1% on Monday to put it at $69.47 a barrel. Oil provides more than 40% of the Russian budget.
The West's sanctions against Russia have hit the country's financial sector particularly hard, restricting its banks' capacity to operate in the global financial system.
[img src="http://admin.mashable.com/wp-content/uploads/2014/12/IMG_6998.jpg" caption="Demonstrators in Moscow hold a sign that reads "No." Some 5,000 people turned out on Sunday to protest the government's decision to slash thousands of healthcare jobs and shutter several hospitals." credit="Evgeny Feldman" alt="IMG_6998"]
The ruble has faced trouble all year, but it began to really tumble around the time that Malaysia Airlines Flight 17 was downed over war-torn eastern Ukraine, killing all 298 people on board. That's when the West ratcheted up sanctions against Russia.
Kiev and the West believe it was struck by a missile from a Russian surface-to-air rocket system. Moscow, meanwhile, says the airliner was fired on by Ukrainian fighter jets.
A bad day for the Russian ruble. Here's the slide since Malaysian Airlines flight MH17 was shot down on July 17 pic.twitter.com/JVigGN8mb8— Stephanie Baker (@StephaniBaker) December 1, 2014
Hard-hit by the ruble’s slide are Russia's consumers, whose salaries are paid in the poorly performing currency. The prices of imported goods have skyrocketed, along with the cost of food.
Apple last week increased prices on its smartphones and computers by 15% to 25% in Russia to keep up with the ailing ruble.
Meanwhile, food has gotten more expensive. Cheese, for example, has leapt to nearly double the price it had been in previous months. Dairy prices have increased some 15%, while the cost of meat has climbed by nearly 20%.
In Russia, rouble owns you— World First (@World_First) December 1, 2014
Simply getting cash has become a challenge. Many ATM machines have run out, or have limited withdrawals to $100 worth of rubles a day.
Buying foreign currency is even harder.
Russia’s Izvestia said today that it had interviewed the country’s top 30 banks by assets and found that they had limited the sale of foreign currency due to the ruble’s fall. Citibank, it reported, was selling foreign currency solely to its clients, while Alfa-Bank had ceased selling foreign money altogether.
we’ve all posted this today, yes? https://t.co/kKZoSwVksv— Alex Hern (@alexhern) December 1, 2014
With the ruble tanking, there is growing fear of a major economic slowdown in Russia.
Despite that, Moscow opened a new shopping mall last week -- the largest in Europe.