Russia cuts rates again in bid to contain surging rouble

The ruble fell 6.9 percent after falling 5.7 percent on Wednesday.

After falling to almost half of its pre-war value following the invasion of Ukraine, the currency quickly recovered, helped by Russia’s massive trade surplus and capital controls. Its trade surplus hit $58 billion in the first quarter of the year, the highest in recent history.

The central bank meeting was brought forward two weeks and earlier in the day than usual. There was no accompanying press conference by Elvira Nabiullina, his governor.

According to official data, annual consumer price inflation reached 17.8 percent in April, the highest since the early years of Vladimir Putin’s regime.

Capital Economics’ William Jackson said the move was “clearly motivated by the remarkable rally in the ruble,” which was trading at 60 to the dollar earlier in the week. Before the invasion it was trading at around 75 rubles per dollar, but in March it fell to almost 140.

The strength of the ruble worries the Kremlin as it risks making Russian exporters’ earnings less valuable domestically, potentially pushing the country into a budget deficit. Russia cuts rates again in bid to contain surging rouble

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