Early on Tuesday, as currency outflows and a contracting trade balance continued to pressure the ruble, it lost ground beyond the symbolic level of 100 to the US dollar.
By around 8 a.m. London time, the ruble had significantly recovered throughout the morning and was trading just above 99.5 to the dollar.
The Bank of Russia scheduled a special meeting to raise interest rates by 350 basis points to 12% in August, when the ruble last fell into the triple digits.
After writing an opinion piece accusing “loose monetary policy” of being to blame for the currency’s decline and the acceleration of inflation, President Vladimir Putin’s economic advisor made the choice.
The Russian economy has been under persistently significant inflationary pressure, according to the central bank, which then raised its benchmark interest rate by another percentage point to 13% during its September meeting.
In a statement released after the meeting, the Bank of Russia stated that “significant proinflationary risks have crystallised,” including the domestic demand expansion surpassing the capacity for output development and the ruble’s devaluation during the summer.
Source (CNBC)
