The increase in the key rate of the Central Bank and the extension of the moratorium on the purchase of foreign currency on the open market led to a sharp strengthening of the ruble
Photo: Andrew Lubimov / RBC
After the decision of the Central Bank to raise the key rate to 7.5%, the rouble has strengthened sharply.
At 13:28 GMT the dollar was trading at 68,4 rbl., and already at 13:36 GMT, six minutes after the Central Bank announces a rate, the U.S. dollar exchange rate fell to 67.8 RUB, according to data from Bloomberg terminal.
Euros, to increase the rate cost 80 rubles., at 13:36 GMT traded at 79.4 percent RUB.
Then the ruble has strengthened by 13:49 GMT the dollar is worth 67,6 RUB and Euro — RUB 79,1
The Central Bank made the decision to increase rates for the first time in 2014, it increased by 25 b.p. In a press release the regulator has pointed to a sharp rise in inflation forecast up to 5-5,5% by the end of 2019. To target of 4%, as expected, the Central Bank, she’ll be back only in 2020. By the end of this year it will amount to 3.8–4.2 percent. In this case, “the quarterly rate of consumer price growth in annual terms slowed to 4% in the second half of 2019,” the Central Bank expects.
“What has happened is the weakening of the ruble associated with capital outflows due to changes in external conditions. While the balance of the current account balance remains high because of stable prices for Russian exports and much higher than the volume of foreign debt payments in the coming months,” said the Central Bank.
“The balance of risks is even more shifted towards proinflationary risks. The main risks are associated with high uncertainty in the external environment and their impact on financial markets”, — said the regulator.
The Central Bank also extended the period during which it will not purchase currency on the open market in the framework of fiscal rules, before the end of December of the current year (previously purchases were suspended until the end of September). Postponed to 2018 purchase a controller can hold for 2019 and subsequent years, the decision he will make after their resume.