Russia's currency has reached relative stability in the run-up to Christmas compared to last week's wild ride, but currency strategists are pondering whether there is more volatility in store for the ruble.
The currency edged higher on Wednesday morning, trading near a two-week high against the dollar at 54.2430 by 8:00 a.m. London time. This comes after ratings agency Standard and Poor's warned late Tuesday that it could soon downgrade Russia's rating to "junk" status.
The country's central bank has aggressively tried to defend the ruble which is down 38 percent year-to-date against the dollar, amid sanctions from Western nations and the dramatic tumble in oil prices. Foreign exchange has been sold in large quantities by the bank and it has also hiked interest rates to 17 percent which failed to stop an 11 percent slide last Tuesday — its steepest intraday fall since 1998.
Chris Weafer, a senior partner at Macro Advisory Limited, believes that the central bank is trying to stabilize the currency over the short term ahead of the Orthodox Christian holiday season in early January - coming slightly later than celebrations in Europe - when lots of Russian travel abroad.
Russian lawmakers are hoping that after the Orthodox Christmas, the situation would be a lot calmer, according to Weafer, but expects it to fall further if the price of oil drops to around $55.
"The key to all this is the oil price," he told CNBC Wednesday.