The Russian rouble fell sharply in volatile trading

The Russian rouble plummeted substantially in tumultuous trading on Thursday, falling below 58 per dollar ahead of a central bank meeting on Friday. It is anticipated to lower interest rates again.

The rouble was down 5.5 percent against the US dollar, trading at 58.05, and down 4.4 percent versus the euro, trading at 58.82.

Russia’s central bank is scheduled to convene on Friday, with analysts expecting a 50 basis point rate decrease to 9 percent.

Despite the West’s broad sanctions on Moscow, severe currency restrictions and declining imports have driven the rouble to multi-year highs.

However, the rising rouble has produced a bout of deflation in the Russian economy. It has concerned officials, who have taken moves to weaken the currency by lifting some regulations and lowering interest rates. Weekly inflation figures released Wednesday evening revealed yet another period of declining prices, with annual inflation in Russia now standing at 15.4 percent.

That is much below the worst-case forecast of 30 percent price increases this year. It has given the central bank cover to reverse its emergency boost to 20 percent in the days following Moscow’s deployment of tens of thousands of troops into Ukraine on February 24.

Analysts also attributed the increased volatility in Thursday’s session to weak summer trading. Russia’s equity markets dropped in tandem with the currency.

The dollar-denominated RTS index fell 6% to 1118 points. MOEX Russian index in roubles was 0.8 percent down at 2057.8 points.

The euro rose 0.06 percent to $1.0188 after falling 0.39 percent overnight from an intraday high of $1.0273, the highest since July 6.

Sterling remained below $1.20 as the field of contenders competing to be Britain’s next prime minister shrunk to two, but a winner is not expected to be announced until September 5.

The Australian dollar was unchanged at $0.6889, while the New Zealand dollar fell 0.16 percent to $0.6220.