Team News Riveting
In an unprecedent move, Russia that had invaded Ukraine on Thursday hiked the interest rates to 20 per cent from 9.5 per cent on Monday.
The decision, an attempt to stabilize the country’s financial markets, was taken in an emergency meeting Monday morning before trading. Russia has been hit with unprecedented economic sanctions after it invaded Ukraine last week.
Bank of Russia says external conditions for the Russian economy have drastically changed. Says rate hike is necessary to make ruble deposits attractive.
The central bank’s western assets — up to 40 per cent of its $630 billion international reserves — have been frozen, some banks have been kicked off the SWIFT financial communications network and access to international capital markets has been frozen.
The country is facing a run-on banks, significant capital outflows, currency crisis and surging inflation. If the trend continued, analysts said the economic crisis could be the worst since the fall of the Soviet Union.
Russia’s Finance Ministry also said it would mandate companies to sell at least 80 per cent of their foreign currency earnings on the domestic market — a move that will force them to buy rubles, thus creating demand for the under-siege currency.
