Investing.com – The decline continued after yesterday’s session, which saw an exceptional decision by the Russian Central Bank to cut interest rates by 3% to 11%, after they raised it to 20% in the wake of the Russian invasion of Ukraine, and then began a gradual 3% rate cut in 3 meetings.
The President of the Russian Central spoke about the steps of the Russian Central Bank, which aim to restore the Russian economic life to its normal state, and that the strength of the ruble and its strong rise affected the economy, and it was necessary to contain this rise.
The ruble is down about 10% against yesterday, as the Russian Central Bank cut its key rate to 11%, its third cut of 300 basis points in a row, with inflation slowing from its highest in more than 20 years.
The ruble was 2.1% weaker against the dollar at 66.63 this morning to hit its lowest level in more than two weeks. On Wednesday, the ruble reached its strongest level since February 2018 at 55.80 against the dollar.
Against the euro, the ruble lost 4.4% to trade at 70.99, slipping away from a seven-year high of 57.10 hit on Wednesday.
Best performing currency this year
Backed by capital controls, the ruble has skyrocketed to become the world’s best performing currency this year so far. New gas payment terms requiring foreign exchange to be converted into rubles and lower imports also helped.
But it has now lost support for the month-end tax period in which export-focused companies usually convert foreign currency into rubles to pay domestic obligations.
Economy Minister Maxim Reshetnikov said the strength of the currency, which has raised concerns about the negative impact on Russia’s budget revenue from exports, is making Russian goods uncompetitive abroad.
It is expected that the mandatory percentage of foreign exchange earnings that exporters must convert into rubles will be reduced from 50%.
Market eyes are focused on the Russian Settlements National Depository (NSD), which promised to make interest payments on Friday of $71.25 million and €26.5 million on Eurobonds.
This is despite Washington’s decision not to extend a key license that allowed Moscow to continue paying bondholders despite sanctions for its actions in Ukraine.