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China woes hit Russian rouble and others

Monday, August 24, 2015 - 01:39

Russia's rouble sinks 3 percent to below 71 to the dollar, approaching 2015 lows as it reacts to further declines in oil prices and plunging Chinese markets, with a near-term intervention to prop up the currency looking unlikely. As Sonia Legg reports it's not the only currency struggling from the market turmoil.

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They may be neighbours but the market turmoil in China isn't helping Russia. The devaluation of the yuan has hit the rouble hard. It dropped below 71 to the dollar on Monday close to all-time lows. It's struggling with low oil prices and western sanctions make it hard for Russian companies to borrow abroad. Ordinary Russians are certainly starting to notice. (SOUNDBITE) (Russian) MOSCOW RESIDENT, ELENA, SAYING: "We don't like it of course. People are now worse off than before. And we don't know what will happen tomorrow." (SOUNDBITE) (Russian) MOSCOW RESIDENT, SVETLANA, SAYING: "It is hard for people. And it can lead to a lot of things. It can even lead to unrest. I don't want any big clashes but people aren't happy." The rouble's not the only currency suffering. The U.S. dollar slid thanks to serious doubts about the likelihood of an interest rate rise this year. The Australian dollar fell to six-year lows and many emerging market currencies plunged. BGC's Mike Ingram says there's been a currency war since Japan introduced Abenomics at the end of 2012. (SOUNDBITE) (English) MARKET COMMENTATOR AT BGC, MIKE INGRAM, SAYING: "Obviously it was dressed up as an attempt to get inflation up in the Japanese economy and kick start growth but at the end of the day it's a 30 percent devaluation. It effectively exported devaluation certainly to Asia - it heightened the problem's that China was always going to have anyway in rebalancing its economy and now we are seeing some of that rebound." There are of course always winners and losers - the frantic dash to safety pushed the euro to a 6-1/2-month high above $1.15.

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China woes hit Russian rouble and others

Monday, August 24, 2015 - 01:39