Ruble crisis could shake Putin's grip on power

Wed Dec 17, 2014 9:14am EST
 
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By Timothy Heritage

MOSCOW (Reuters) - Russia failed to halt the collapse of the ruble on Tuesday, leaving President Vladimir Putin facing a full-blown currency crisis that could weaken his iron grip on power.

A 6.5 percentage point interest rate rise to 17 percent overnight failed to prevent the currency hitting record lows in a "perfect storm" of low oil prices, looming recession and Western sanctions over the Ukraine crisis.

Putin has blamed the ruble's crash on speculators and the West, while a presidential spokesman on Tuesday attributed the market turbulence to "emotions and a speculative mood".

The rouble lost 11 percent against the dollar on Tuesday, its steepest one-day fall since the Russian financial crisis in 1998. It has fallen 20 percent since the start of the week and more than 50 percent this year.

As Moscow faced up to the brewing crisis, U.S. Secretary of State John Kerry said sanctions could be lifted swiftly if Putin takes more steps to ease tensions and lives up to commitments under ceasefire accords to end the Ukraine conflict.

"These sanctions could be lifted in a matter of weeks or days, depending on the choices that President Putin takes," Kerry told reporters in London.

Keeping the pressure on Moscow, President Barack Obama was expected to sign legislation this week authorizing new sanctions on Russia over its activities in Ukraine and providing weapons to the Kiev government, White House spokesman Josh Earnest said.

But he has said he does not want to take new steps that are not synchronized with European partners.   Continued...

 
Russian President Vladimir Putin attends the inauguration of World Diamond Conference in New Delhi December 11, 2014. REUTERS/Ahmad Masood