Rouble falls after rallying, stocks down on new U.S. sanctions

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The Russian rouble on Friday hit its strongest level against the euro since June 2020 after an unexpected central bank rate cut, but soon reversed gains and ended the day in the red, while stocks fell after the U.S. Congress voted to ban Russian oil.

The central bank cut its key interest rate to 17% from 20% ahead of a regular board meeting scheduled for April 29, and said it was open to possible further cuts at upcoming meetings.The volatile rouble rallied shortly after the rate cut, which partially reversed the emergency rate hike that the central bank delivered in late February after Russia started what it calls "a special military operation" in Ukraine on Feb. 24.

The rouble's rapid recovery from the record lows hit in March raises doubts about the durability of its gains. Anyone who tries to buy foreign currency online at a bank in Russia or, illegally, at a foreign exchange booth, or who buys goods and services online denominated in foreign currencies will find the actual rate considerably worse.Yields on 10-year OFZ treasury bonds, which move inversely to their prices, fell to 10.77% from 11.62% seen before the rate cut.

"If the experience of the 2014/15 rouble crisis is any guide, a large interest rate cut is likely to be followed by much more gradual easing as the CBR targets a large positive real interest rate to bring inflation back down to its target," Capital Economics said in a note.VOLATILE MARKETS The rouble is supported by Russia's strong current account surplus amid high commodity prices as well as Russia's capital controls, said Olga Belenkaya, head of macro research at Finam brokerage.

 

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I just checked and it's lower than it was before the war. why tell lies like that? to boost morale? so that people without knowing the truth say proudly 'take that putin' to cover the inflation and the lack of merchandise on the shelves?

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