finance news

Russia’s central bank doubles interest rate after ruble slides 30%

Russia’s central bank doubles interest rate after ruble slides 30%
Russia’s central bank doubles interest rate after ruble slides 30%

Russia’s central bank, the Bank of Russia, has reportedly raised its interest rate by more than double, following a 30% slump in the valuation of its currency, ruble, against the US dollar.

The bank has hiked the rate from 9.5% to 20% to ease the impact on prices.

The sudden rise in rate by the central bank was done to prevent rapid depreciation in the ruble’s value, which threatens the currency’s buying power as well as the savings of ordinary customers.

The decision comes amidst the UK, US, and EU cutting off Russian banks from western financial markets and prohibiting dealings with state-owned investments funds, the finance ministry, as well as the central bank, due to Russia’s invasion of Ukraine.

Russia, which has around $630 billion in reserves, stockpiled from soaring prices of oil and gas, has most of it stored in foreign currencies, like sterling, dollar, and euro, as well as in gold. A Western ban restricts the country from accessing this cash.

Last week, the central bank was forced to increase the amount of money supplied to ATMs due to increased demand for cash, the highest since March of 2020.

During the weekend, it issued an appeal for calm, saying that the bank had the required resources and tools for maintaining financial stability, as fears sparked over new financial sanctions causing a bank run in Russia.

The central bank also ordered brokers to suspend the execution of orders to sell Russian investments by foreign individuals and legal entities, adding that it has not yet decided on opening markets apart from foreign exchange or money markets.

One of the harshest measures imposed on Moscow as of now was cutting off of Russian banks from Swift, the international payments system on which the country heavily relies for major oil and gas exports. Assets of Russia’s central bank have also been frozen to limit the country’s ability in accessing foreign reserves.

It has been jointly stated that this was done to further isolate the country from the international financial system.

Source credit: https://www.bbc.com/news/business-60550992

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Vinisha Joshi

Vinisha Joshi

Despite graduating with an engineering degree in electronics and communication, Vinisha Joshi chose the road less travelled, and decided to pursue her career in content writing . Currently, she pens down articles for cuereport.com and a few other distinguished news platforms, pertaining to business and finance.