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Russia’s troubled ruble currency dropped value on Monday after the country’s central bank announced measures to support exporters, Russian newspaper Gazeta.ru has reported.
After the announcement of the central bank’s decision on Monday, the dollar and the euro exchange rates immediately rose by RUB 1.50 on the Moscow Stock Exchange. By the end of trading session, the ruble had recovered some of the loss, with the exchange rates at RUB 51.50 to the dollar and RUB 55.50 to the euro.
Under its decision, the Russian Central Bank increased the cost of currency for banks: minimum interest rates in currency auctions were raised starting from Tuesday.
The free floating ruble was negatively impacted by the central bank’s decision to increase the cost of currency to banks and to reduce the key rate. A weak ruble is beneficial for Russian finance and exporters, and the central bank is not preventing the ruble from sliding, according to Gazeta.ru.
The central bank raised the minimum interest rates for foreign currency auctions under repo transactions by 0.5 percentage points. The decision was an unpleasant surprise for market participants, resulting in higher costs for foreign debt servicing.
However, peak payments under foreign currency debts have passed, and in April and May the total repayment under the external debt amounts to only $10 billion, which is 1.5 times less than the repayment amount in February.