Russia’s central bank has intervened to ease pressure on financial markets after the rouble tumbled past 110 to the dollar, losing nearly a third of its value since early August.
The bank announced it would stop foreign currency purchases from November 28 until the end of the year and defer these purchases until 2025. This move aims to reduce volatility in financial markets.
New economic data shows Russia’s economy is overheating, with real wages up 8.4% in September and unemployment at a record low 2.3%. However, weekly inflation stands at almost 0.4%, despite a benchmark interest rate of 21%.
The rouble’s fall has further fueled inflation, which is running at around 8% a year. The central bank estimates that a 10% fall in the rouble’s value adds 0.5 percentage points to inflation.
Analysts point to US sanctions imposed on Russia’s third-largest lender, Gazprombank, as behind the rouble’s sharp fall. A deputy CEO of VTB said sanctions have disrupted foreign currency deliveries to the Moscow Exchange.
The government has been trying to stabilize the market, with Economy Minister Maxim Reshetnikov predicting that it will soon stabilize. However, some experts are skeptical about this prediction, and analysts suggest alternative measures could be taken, such as forcing exporters to sell more foreign currency by raising mandatory sale requirements.
Source: https://www.reuters.com/markets/currencies/russian-rouble-down-by-one-quarter-since-early-august-2024-11-27