“The recent fall in the ruble is increasing pressure on the Bank of Russia, forcing it to raise its key rate – perhaps the most since the beginning of the war in Ukraine.”, — write: epravda.com.ua
The recent fall in the ruble is increasing pressure on the Bank of Russia, forcing it to raise its key rate – perhaps the most since the beginning of the war in Ukraine. This is reported by Bloomberg. According to the Central Bank, since November 21, when the US imposed sanctions on about 50 Russian banks, the currency has weakened by almost 8% against the dollar and the yuan. This is likely to increase inflation, which the Bank of Russia is trying to contain by raising interest rates to record highs. The central bank said it was prepared to continue raising the cost of borrowing, currently at 21%, to the level needed to bring inflation back to its 4% target next year. According to Bloomberg estimates, this could mean that the next step would be a rate hike of up to 25%.Advertisement: Demand for foreign currency in the domestic market has surged amid fears that the new restrictions will severely limit foreign currency inflows.Advertisement: Governments are struggling to play down impact of the ruble’s weakening, emphasizing, in particular, that this is a boon for exporters. But with inflation more than double the central bank’s target, a currency collapse could force regulators to act, despite already painful lending conditions. The ruble has lost 19% against the US dollar since the start of the year, making it one of the worst-performing emerging market currencies. The Bank of Russia has been using interbank transactions to calculate the exchange rate since June, when the US imposed sanctions on the Moscow Stock Exchange, which immediately halted trading in the dollar and euro. We will remind: the Central Bank of the Russian Federation will stop buying foreign currency on the domestic currency market from November 28 until the end of 2024. The Russian ruble has fallen more than 24% since early August, when its slide began, and could continue to weaken. New US sanctions against Russian banks led to a further fall in the ruble, putting at risk the last channels of direct foreign currency inflows into the country.
