LONDON (Reuters) – Russia’s central bank hiked its key interest rate by 350 basis points to 12% on Tuesday, an emergency rate move to try and halt the rouble’s weakening past 100 to the dollar after a public call from the Kremlin for tighter monetary policy.
The rouble has lost more than a fifth of its value against the dollar since the Ukraine war began last year.
It was last trading at around 97 to the dollar, having weakened to close to 102 on Monday.
COMMENTS:
VIKTOR SZABO, PORTFOLIO MANAGER, ABRDN, LONDON:
“Clearly it seems that they have reached the pain threshold. I thought it would be a bit higher, but clearly they like the round numbers.”
“It’s difficult to say whether they’re intervening, that is not something they normally do. I think it was just all the expectation about the meeting today.”
“Now they will have to wait, but their main problem is that their trade surplus is shrinking and they can’t do much about that.”
IPEK OZKARDESKAYA, SENIOR ANALYST, SWISSQUOTE BANK, GLAND, SWITZERLAND:
“The impact is going to be quite limited from the central bank intervention as obviously the major problems remain and the biggest one is the Russian situation in Ukraine.”
“The rouble’s depreciation is not excellent news for Russia, especially in its financing of the war and also the Russian economy is under a different downside pressure due to the geopolitical issues.”
VICTORIA SCHOLAR, HEAD OF INVESTMENT, INTERACTIVE INVESTOR, LONDON:
“Russia’s central bank hiked interest rates from 8.5% to 12% after the rouble’s sell-off to 17-month lows yesterday. The Bank of Russia said, ‘inflationary pressure is building up’ and ‘inflation expectations are on the rise’. The decision has helped to boost the rouble today which is regaining ground against the US dollar.”
(Reporting by the markets team in London and Bangalore; Compilwed by Dhara Ranasinghe; Editing by Christina Fincher)
