Published on : 26/05/2022 – 10:28Modified : 26/05/2022 – 10:26
Moscow (AFP) – The Russian central bank lowered its main key rate from 14% to 11% in particular to cushion the consequences of the strengthening of the ruble, at a time when the authorities are struggling with the sanctions imposed because of the offensive against Ukraine.
“The external conditions for the Russian economy remain difficult, which considerably reduces economic activity”, underlines the monetary institution in a press release, referring to “the dynamics of the price of the ruble” and “the weakening of inflationary pressure ” to explain his decision.
“The risks weighing on financial stability have eased a little, making it possible to relax capital control measures”, underlines the BCR, which does not exclude other cuts in its rate in the future.
The next meeting of the institution is scheduled for June 10.
“We doubt that a rate cut will stimulate capital inflow, which is affected by the freezing of financial assets of foreigners in Russia and Russians abroad. However, a lower rate is more appropriate in the current circumstances. “, estimated Alfa-Bank in a note.
The reduction in the key rate should in principle have an influence on the price of the rouble, as borrowing becomes less attractive for investors, which weakens the currency.
“The strength of the ruble is a reflection of high oil and energy prices, but especially the fall in imports due to sanctions,” observed in a note Timothy Ash, of Bluebay Asset Management.
“This suggests that growth will continue to be battered, there is likely to be a deep recession this year. A strong currency will not help and will weigh on oil export revenues that go into the budget.”
On Wednesday, Kremlin spokesman Dmitry Peskov assured that the government was closely monitoring the situation around the Russian currency.
The latter, which hovered around 80 rubles to the dollar and 90 rubles to the euro before 24 February, the day Russian troops entered Ukraine, initially weakened considerably, before recovering from the March 9 and to reach levels not seen since 2018 for the dollar and 2015 for the euro.
The Russian central bank has indeed implemented severe capital controls.
The Russian currency has also benefited from the opening of accounts in rubles by a large part of the foreign companies that are clients of the Russian gas giant Gazprom in order to settle their gas purchases, despite warnings from the European Union that this mechanism amounted to circumventing the sanctions imposed on Russia.
On Monday, the Ministry of Finance announced the forthcoming reduction in the proportion of Russian exporters’ income that they had to transform into rubles, from 80% to 50%, a sign of an easing of the exchange control measures put in place by the authorities to prevent a collapse of their national currency.
Thursday around 11 a.m. (0800 GMT), i.e. after the announcement of the BCR, the euro was trading at 63.3 rubles, up 2.7 rubles, and the dollar at 60.8 rubles or 1.54 rubles more than the day before.
© 2022 AFP