Russia’s central bank will hold an emergency meeting on interest rates today after a blame game with the Kremlin prompted a sharp slide in the rouble.
The currency plunged to its lowest level against the dollar for a year and a half – at less than one US cent – before paring back the losses after the meeting was announced.
Russia’s economy has been in crisis since it launched its war on Ukraine in February last year left it facing isolation from the West.
Bumper oil revenues cushioned the blow, and saw the rouble recover after an initial slump, but pressure is building again.
And now Russian leader Vladimir Putin’s officials could be lining up Bank of Russia governor Elvira Nabiullina as a scapegoat.
Pressure: Russian leader Vladimir Putin (pictured) could be lining up Bank of Russia governor Elvira Nabiullina as a scapegoat after the Rouble slumped
Putin’s economic adviser Maxim Oreshkin yesterday rebuked the central bank for the rouble’s sharp slide as well as blaming it for spiralling prices, writing in an article for the TASS news agency: ‘The main source of rouble weakening and accelerating inflation is soft monetary policy.
‘The central bank has all the tools to normalise the situation in the near future.’
At its lowest point yesterday, a US dollar was worth 101.75 roubles, the worst level for the Russian currency in 17 months, leaving it down 30 per cent so far this year.
But hours later it had recovered and was ahead on the day after the central bank meeting was announced.
Rates have already been raised last month by one percentage point to 8.5 per cent.
The rouble hit its weakest level on record in March last year, at 120 against the dollar.
But a sharp interest rate hike to 20 per cent helped to stem the decline. It reversed course to hit a seven-year high as surging oil prices boosted the country’s export revenues.
Since then, however, oil prices have come down as Europe has been weaning itself off its reliance on Russian gas.
At the same time, sanctions are pushing up the cost of imports.
Pro-Kremlin TV presenter Vladimir Solovyov last week claimed ‘every other country is laughing at us’ during an expletive-laden rant against the central bank.
The bank has blamed the currency’s weakness on Russia’s shrinking current account surplus – the balance between financial flows in an out of the economy.
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