6632
Russia Admits Action to Buoy Rouble
World Economy

Russia Admits Action to Buoy Rouble

Russia's central bank has admitted it intervened to support the rouble in foreign currency markets last week spending a total of $4.53 billion. It has spent more than $70bn supporting the rouble since the start of the year, Reuters said in a report.
Its admission came as the World Bank warned the Russian economy would shrink by at least 0.7% in 2015 if oil prices do not recover. Both the currency and Russian share indexes fell on Tuesday as global oil prices fell to a new five year low.
Russia has been forced to defend its currency as Western sanctions, in response to its role in eastern Ukraine, and falling oil prices. But analysts suggested it may take a significant hike in interest rates to stop the currency from further falls as well as surging inflation, which stood at 9.1% in November.
"The CBR [Central Bank of Russia] will need to hike rates significantly to defend the rouble, or let the rouble further weaken," said Standard Bank analyst Tim Ash in a note.
The bank has already raised interest rates by 1.5% in October to 9.5%. It is expected to raise interest rates further later this week.
On Tuesday the rouble fell by 0.9% against the US dollar to 54.25 roubles and lost 1.1% to 67.00 against the euro.
In November, CBR announced it was going ahead with a free float of the rouble by abolishing its unofficial link to the euro and the US dollar. It also announced it was ending automatic interventions to support the currency, instead propping it up only when it was deemed necessary.
The bank had previously supported the rouble when the exchange rate against the euro and dollar exceeded certain limits.
At the time, the CBR's chairwoman Elvira Nabiullina, said the bank would instead intervene in the currency market "at whichever moment and amount needed to decrease the speculative demand."
The bank has said it hopes to achieve a full floating exchange rate in 2015.

 

Short URL : http://goo.gl/WjUDT9

You can also read ...

While China tries to alleviate its demographic crunch, the aging society means a pension shortfall.
Forget that image of sweatshops making all kinds of cheap...
Russia Economic Recovery Underway
Retail sales in Russia picked up in April, while real wages...
In 2017 banks had total mortgage lending of around $352 billion.
High levels of household debt are the greatest risk to Sweden’...
Greece at Crucial Point
Discussions are heating up over future debt repayments for...
Brazil CB Keeps Rates on Hold
Brazil’s central bank considered cutting interest rates last...
Peru Economy Strengthens
Economic growth in Peru strengthened in the first quarter...
EU Tells Italy to Cut Debt, Warns of Euro Spillover
Italy’s incoming government should aim to cut its heavy public...
Saudi Gov’t Told Not to Boost Spending
The International Monetary Fund urged the Saudi government not...

Trending

Googleplus