Russia Interest Rate Hike: To stop the fall of ruble, the central bank increased interest rates, increased by 3.5 percent

Russia's central bank on Tuesday hiked the policy interest rate by a whopping 3.5 percent to shore up its currency, the ruble, and tackle inflation amid an ongoing war with Ukraine. It is known that the Russian currency ruble has registered a significant decline against the dollar.

Ruble falls sharply against dollar

The ruble had come down to 101 against the US dollar on Monday. In this way, since the beginning of the year 2023, the value of the ruble against the dollar has fallen by a third. This is the lowest level of the ruble in the last 17 months.

Russian central bank raised interest rates

In such a situation, in an emergency meeting of the Board of Directors of the Russian Central Bank, it was decided to increase the policy interest rate by 3.5 percent. Now the interest rate has reached 12 percent.

Giving information about this decision, the Russian Central Bank said in a statement

Demand has outstripped the ability to increase economic output, leading to inflation and an impact on the ruble's exchange rate.

Various sanctions on Russia

Let us tell you that since the start of military action against Ukraine in February last year, the US and many western countries have imposed tough economic sanctions on Russia. This has affected Russia's economic activities especially exports.

Interest rates were also increased in Russia in July

With this move, Russia's central bank wants to deal with rising prices by increasing the cost of borrowing. Earlier in July also the central bank had increased the interest rate by one percent.