World Economy

Forex Risks High for Russia

Forex Risks High for Russia Forex Risks High for Russia

The woman with the difficult task of running Russia’s central bank has been talking about risk. Governor Elvira Nabiullina was speaking specifically about the risk of loans taken out not in rubles, but in dollars or euros. She said the bulk of banking loans in Russia should be in rubles to minimize risks related to currency fluctuations. “Sharp currency fluctuations which we have seen have shown that forex risks are very significant both for our banks and for borrowers,” Nabiullina told Reuters in an interview. Slumping oil prices and western sanctions have slammed the ruble which has lost over half its value against the dollar since September 2014.The bank has tightened its regulations on foreign denominated loans and asked banks to set aside more capital against them and Nabiullina said it is now considering making banks set aside more reserves for retail and corporate forex deposits. To try to protect the ruble it has taken drastic measures, including hiking the benchmark interest rate in December 2014 to 17%. The rate is now 11%.