A little before one Russian time came the announcement from the Russian central bank. The decision aims to limit the risk of inflation and further depreciation of the Russian ruble.
Clean Uplift Tuesday night is the sixth year, and comes less than one week after the central bank raised the key interest rate by a full percentage point, to 10 , 5 percent. Governor Elvira Nabiullina announced last that they are prepared to take “unorthodox grip” if clean salvaging not prove to brake ruble fall.
Worst ruble day
The value of the ruble has declined precipitously in recent months, first as a result of Western sanctions and in recent weeks also as a result of falling oil prices.
Monday was the reddest day ruble since 1998, said the Russian currency fell 9.7 percent against the dollar. So far this year the ruble has weakened more than 49 percent against the dollar.
The problems with Russia run deep, and several analysts fear the high interest rate, along with the price collapse in the oil market and the Western sanctions, will inflict Russian economy a burden it can not live very long with, according to Bloomberg.
– There is an idea of the interest jumped unfortunately not sufficient. The Russian central bank has tried everything by the book, with the exception of capital controls, said Nicholas Spiro at Spiro Sovereign Strategy in London.
– It is the right move, but it was not easy to take it says Lan Hague, one of the partners in Firebird Management LLC.
The billions flowing out
The Western sanctions caused Russian support to prorussiske rebels in Ukraine, has received international investors to shun Russia and draw money out of the country.
The Russian Central Bank has estimated that capital flight from the country next year will amount to 120 billion dollars, slightly less than the current year where it is estimated that the same amount is 132 billion.
Last week downgraded the World Bank’s economic forecasts for Russia over the next two years. They believe in zero growth in both 2015 and 2016.
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