Russia’s desperate attempt to shore up plummeting Ruble, here’s what it is doing | International Business News

MOSCOW: Russia’s Central Bank has raised its key interest rate from 9.5% to 20% in a permanent attempt to reach a stronger ruble and prevent the formation of banks amid Western sanctions weakening over Russia’s war in Ukraine.

The bank’s action follows a Western decision on Sunday to freeze its hard currency reserves in unprecedented transfers that could have devastating consequences for the country’s financial stability. It is unclear exactly what share of Russia’s estimated $ 640 billion hard currency will be affected by the transfer, but European government officials say at least half of it will be affected.

The move would increase pressure on the ruble by limiting the ability of financial authorities to make hard currency contributions to prevent the ruble from sinking further and causing further inflation. The ruble was sharply dive early Monday trading.

The Central Bank also ordered off measures to help banks deal with the crisis by putting more money into the system and easing restrictions for banking services. At the same time, it temporarily prevents non-residents from selling government contracts to help ease the pressure on the ruble from foreign investors eager to pay off.

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