Russia's rouble remain volatile after central bank's 350 points rate hike

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Reuters reported. The Russian rouble, having experienced a depreciation of over 20% against the US dollar since the commencement of the Ukraine conflict, exhibited a 0.2% decline, settling at a rate of 97.82 against the dollar. On Monday, the currency reached a point close to its lowest value in 17 months, reaching 101.75, and briefly exhibited a trading rate of 92.60 on the following Tuesday morning, displaying considerable volatility as market response followed the unexpected intervention by the central bank.

Against the Euro, the rouble displayed a marginal increase of 0.2%, resulting in a trading rate of 106.93, while it remained stable at a value of 13.39 against the yuan. The heavy currency losses attracted criticism from various quarters including Kremlin which slammed the central bank for its monetary policy. Kremlin said that the loose money policy was the reason for the weakening rouble.

Russia's currency is now also showing the impacts of heavy sanctions imposed by Western countries in the wake of the Russian invasion of Ukraine. The war has boosted military spending in Russia, putting more pressure on the currency. "The central bank has all the tools to normalize the situation in the near future," President Vladimir Putin's economic adviser Maxim Oreshkin said on Monday.

"It is in the interests of the Russian economy to have a strong rouble," Maxim Oreshkin added as per Reuters report. The last time the Russian central bank called such an emergency meeting was in late February 2022 in the immediate fallout of the Russian invasion of Ukraine. The central bank then raised the benchmark interest rates to 20%.