On Monday, the currency fell below 100 rubles per dollar. It is the lowest ruble exchange rate since March 2022.
The rate hike – which comes just three weeks after a 1 percentage point increase – is aimed at curbing inflationary risks, which increase as the ruble loses value.
Pressured by the war
The ruble received immediate support from the interest rate announcement, but remains one of the year’s losers in the foreign exchange market with a fall of over 22 percent against the dollar since the turn of the year.
It is under pressure, among other things, from high costs for Russia’s war of aggression against neighboring Ukraine, reduced export earnings and an increasing outflow of capital from Russia.
The country’s central bank has failed to stem the fall of the Russian currency, despite suspending its planned purchases of foreign currency in the domestic market for the rest of 2023.
Dampens economic growth
Iikka Korhonen, head of research at the Bank of Finland, says Howl that the sharp increase in the policy rate does not mean that the Russian economy is in crisis or that it is about to crash.
– The ruble may be in crisis, but not the entire Russian economy.
He further says that the increase dampens the Russian economic growth that was expected this autumn.