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Ruble takes a big hit

Moscow - The ruble dropped sharply in early trading on Thursday as oil prices dipped below $42 a barrel and officials forecast a further devaluation of the Russian currency.

As of 08:00 GMT the ruble dropped 1.3% to 39.3 against a basket of dollars and euros.

Deputy Prime Minister Igor Shuvalov said on Wednesday that the ruble may drop further if the economic situation gets "significantly worse". The drop in crude prices, meanwhile, hurt the currency because the Russian economy depends heavily on the oil sector.

The ruble is swiftly nearing the limit of 41 rubles - the lower limit of its new trading range that the Central Bank announced seven days ago.

The Central Bank last week effectively allowed a 10% depreciation of the national currency, ending a wave of gradual near-daily devaluations that have wiped away more than a fifth of the ruble's value against the dollar-euro basket since November.

The Central Bank had been spending billions of dollars in currency reserves to keep the ruble from falling faster. Its move to let the ruble trade more freely aimed to curb that spending.

The ruble has fallen 30% against the dollar since August amid tumbling oil prices and massive capital outflows.

- AP

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