Russia’s central bank surprised the Forex market today by a huge interest rate hike aimed at cooling inflation and slowing the ruble’s depreciation. Yet the Russian currency did not respond to the announcement, extending its massive slump.
The Bank of Russia raised its main interest rate by as much as 1.5 percent to 9.5 percent at today’s meeting, a move completely unexpected by market analysts. The central bank said in the statement:
During September-October significant changes in external conditions have taken place: considerable fall in oil prices and stricter sanctions imposed by certain countries against several large Russian companies. As a result the ruble depreciated that together with restrictions on the import of certain food items imposed in August resulted in further acceleration in consumer prices growth.
Indeed, the ruble has depreciated greatly after the United States and the European Union imposed sanctions on Russia due to its perceived involvement in the Ukrainian crisis. The central bank was attempting to support the currency but has been unsuccessful so far. The bank predicted that inflation will remain above 8 percent till the first quarter of the next year, but voiced hope that growth of consumer prices will slow to 4 percent later.
USD/RUB rose from 41.6103 to 43.0401 as of 18:45 GMT today. EUR/RUB advanced from 52.3140 to 53.8820, reaching the high of 54.1670 intraday.
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