Russian ruble slides again despite rate hike

[WestVirginiaRebel]

Yahoo News: MOSCOW (AP) -- The Russian ruble faced intense selling pressure Tuesday, falling at one stage by a whopping 20 percent to historic lows despite a massive pre-dawn interest rate hike from the country's central bank.

 

The surprise decision to raise the rate to 17 percent from 10.5 percent came in the middle of the night and represented a desperate attempt to prop up the troubled currency. The ruble has fallen sharply in recent weeks as a result of sliding oil prices as well as the impact of Western sanctions imposed over Russia's involvement in Ukraine.

 

The collapse in the ruble, which has spurred ordinary Russians to buy imported products such as fridges and cars and is stoking inflation, is likely to heap pressure on President Vladimir Putin. Still, support for Putin appears to be holding up. State television, meanwhile, urged citizens not to panic amid Tuesday's rout.

 

The Central Bank's move on interest rates aimed to encourage currency traders to hold onto their rubles doing so gives them potentially big returns, certainly in comparison to many other currencies, such as the dollar, where the interest rate returns are near zero percent.

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More here. If history is any indication, this may not end well.

[Cyber_Liberty]

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