AI
Wednesday, December 17, 2014 12:10:44 PM
Russia imposes steep interest rate hike as ruble plummets
Russia appeared headed Tuesday for the worst economic turbulence in President Vladimir Putin’s 15 years in power, raising fundamental questions about the future of the country as investors’ trust in its basic institutions seemed to be eroding fast.
The fear was sparked by the plummeting ruble, which has dropped 17 percent against the dollar in two days despite a dead-of-night decision Tuesday by the Russian central bank to impose a steep interest-rate hike to stem the currency losses.
At one point Tuesday, a dollar could buy 79 rubles, an extraordinary development for a currency that stood at 33 rubles to the dollar in January and held mostly steady for much of the year. Later Tuesday, the currency stabilized closer to 68 rubles to the dollar.
The sharp interest-rate hike — from 10.5 percent to 17 percent — promised to throw Russia’s economy into a deep recession next year, and it was a sign that Russian policymakers feel they have few options left to fight the crisis.
http://www.washingtonpost.com/world/to-halt-crisis-russia-central-bank-hikes-interest-rates-as-ruble-falls/2014/12/16/9ebb1610-4c9e-45bd-9297-475b0d3878cc_story.html
The central bank tactics have revived memories of Russia’s 1998 financial meltdown, when the nation defaulted on debts and hyperinflation wiped out a generation’s savings. Buoyed by rising oil prices, Putin devoted much of his early years to building institutions that would preserve economic stability. As a result, Russia still has far more crisis-fighting resources today than it did then, including the world’s fourth-largest currency reserves. They stood at $416 billion at the beginning of the month, down $80 billion this year.
Russia’s economy was already in trouble before the March annexation of Ukraine’s Crimean Peninsula and subsequent support for pro-Russian rebels in eastern Ukraine. Those decisions sparked Western sanctions and the worst tensions between Russia and the West since the Cold War. The unpredictable environment has spooked investors, which the central bank predicts will pull $128 billion from Russia this year.
Russia appeared headed Tuesday for the worst economic turbulence in President Vladimir Putin’s 15 years in power, raising fundamental questions about the future of the country as investors’ trust in its basic institutions seemed to be eroding fast.
The fear was sparked by the plummeting ruble, which has dropped 17 percent against the dollar in two days despite a dead-of-night decision Tuesday by the Russian central bank to impose a steep interest-rate hike to stem the currency losses.
At one point Tuesday, a dollar could buy 79 rubles, an extraordinary development for a currency that stood at 33 rubles to the dollar in January and held mostly steady for much of the year. Later Tuesday, the currency stabilized closer to 68 rubles to the dollar.
The sharp interest-rate hike — from 10.5 percent to 17 percent — promised to throw Russia’s economy into a deep recession next year, and it was a sign that Russian policymakers feel they have few options left to fight the crisis.
http://www.washingtonpost.com/world/to-halt-crisis-russia-central-bank-hikes-interest-rates-as-ruble-falls/2014/12/16/9ebb1610-4c9e-45bd-9297-475b0d3878cc_story.html
The central bank tactics have revived memories of Russia’s 1998 financial meltdown, when the nation defaulted on debts and hyperinflation wiped out a generation’s savings. Buoyed by rising oil prices, Putin devoted much of his early years to building institutions that would preserve economic stability. As a result, Russia still has far more crisis-fighting resources today than it did then, including the world’s fourth-largest currency reserves. They stood at $416 billion at the beginning of the month, down $80 billion this year.
Russia’s economy was already in trouble before the March annexation of Ukraine’s Crimean Peninsula and subsequent support for pro-Russian rebels in eastern Ukraine. Those decisions sparked Western sanctions and the worst tensions between Russia and the West since the Cold War. The unpredictable environment has spooked investors, which the central bank predicts will pull $128 billion from Russia this year.
My post is for my entertainment, do your own DD before pushing your
buy/sell buttons
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