Rate of interest up. Presumably extra intervention, and reconstituted capital controls — though it’s onerous to inform. So, once you see the image of the ruble rebound…
Notes: Larger is weaker RUB.
Bear in mind, the coverage price is up 350 bps, and is coming again to 2014 ranges, even when not again to March 2022 ranges.
If the rate of interest hike mixed with capital controls will not be ample to stabilize the RUB, then the CBR might want to expend foreign exchange reserves to buy RUB. Nonetheless, the quantity of unfrozen foreign exchange obtainable for these purchases is, apparently, restricted, and getting extra restricted the extra the present account is in deficit (mentioned on this post).
As of July (earlier than the most recent slide), the actual worth of the RUB was under that on the onset of the warfare.
Determine 1: Actual worth of RUB in opposition to a broad basket of currencies, 2020=100 (blue). Larger is stronger RUB. Supply: BIS.
Extra, here. Bear in mind, the interest rate defense implies a decrease degree of mixture demand than in any other case would happen (i.e., you may hold the ruble worth up, however ship the economic system into one other downturn).