Russia's central bank raises key interest rate to 17%December 16, 2014 - 09:45 AMT PanARMENIAN.Net - Russia's central bank raised its key interest rate to 17 percent in the early hours of Tuesday, Dec 16 morning in an emergency move to halt a collapse in the ruble as oil prices decline and the country's sanctions-hit economy slides towards recession, according to Reuters. The ruble strengthened sharply after the decision, recouping some of its heavy losses on Monday, when the currency staged its largest one-day fall since 1998. "This decision is aimed at limiting substantially increased ruble depreciation risks and inflation risks," the central bank said in a statement. The decision is effective from Tuesday and brings the cumulative increase in the one-week minimum auction repo rate to 11.5 percentage points this year amid market turmoil linked to the Ukraine crisis. The central bank also increased the maximum volume of foreign currency it provides to Russian banks via its foreign-exchange repurchase agreement auctions for 28 days to $5 billion from $1.5 billion. It said that in order to strengthen the efficiency of monetary policy loans secured by non-marketable assets, guarantees for two to 549 days would be provided at a floating interest rate. The outlook for Russia's economy has darkened considerably since the summer as capital flight has soared due to broad-based risk aversion to Russian assets and sanctions restricting Russian companies' access to international capital markets. The central bank now says the economy is likely to contract in annual terms early next year. Investors took the rate hike as positive, saying it showed the central bank's defense of the currency had teeth. "This is definitely a step in the right direction. The real interest rate right now is significantly positive, 7 to 8 percent," said Jorge Mariscal, chief investment officer for emerging markets at UBS Wealth Management in New York. "This should make it more difficult to short (the ruble). I think it shows they are really concerned about the speed of the decline in the ruble." Photo: RIA Top stories Yerevan has dismissed Turkey’s demand to shut down the Armenian nuclear power plant as “inappropriate”. Armenia will loan 2.9 billion drams to Nagorno Karabakh (Artsakh), according to a draft government decision. The Ministry of Ecology and Natural Resources of Azerbaijan has “strongly condemned” Armenia’s decision. Kerobyan has said that for the first time in the history of Armenia, the volume of foreign direct investments amounted to about $1 billion. Partner news | Scholz hopes Armenia-Azerbaijan peace treaty will be signed this year German Chancellor Olaf Scholz hopes that a peace treaty between Armenia and Azerbaijan will be signed this year. Ucom equips four bus stops in Ijevan with free Wi-Fi Ucom now provides free Wi-Fi coverage in smart bus stops in four communities of Ijevan. Armenians stage more campaigns against territorial concessions to Azerbaijan Protesters blocked more roads across Armenia on Friday, April 26 in continuing attempts to scuttle territorial concessions to Azerbaijan. Czech-Armenian military cooperation discussed in Yerevan A delegation led by the Director General for the Industrial Cooperation Division of the Ministry of Defence of the Czech Republic visited Armenia. |