Jan. 30 (Bloomberg) -- Russia’s central bank raised two key interest rates for the third time since the start of November in a bid to curb inflation and to stabilize the exchange rate of the ruble.
The interest rate for one-day and seven-day loans from the bank in repurchase auctions will climb to 11 percent from 10 percent on Feb. 2, Bank Rossii said in an e-mailed statement today.
The ruble slid as much as 2.2 percent today to 35.8502 per dollar, just 0.4 percent away from breaking through Russia’s 36 per dollar limit, before paring declines. Chairman Sergey Ignatiev said today that Bank Rossii will intervene in the market, limit the amount of refinancing offered to banks and adjust interest rates to keep the ruble from breaking the new trading band.
Bank Rossii expanded its trading range for the ruble 20 times since mid-November before policy makers switched last week to let “market” forces help determine the exchange rate within a widened limit. The central bank drained more than a third of its foreign-currency reserves, the world’s third-largest, since August to stem the ruble’s 34 percent slide against the dollar.
Investors are betting against the ruble as a 69 percent slump in oil prices in the past six months weakens the economy, triggering Russia’s worst financial crisis since 1998. Some $290 billion left the country since August, according to BNP Paribas SA.
Finance Minister Alexei Kudrin said today that inflation may run at about 13 percent this year. Russia’s budget revenue may tumble by 4.4 trillion rubles ($124.6 billion), or 40 percent, as the slump in oil prices reduces tax revenue for the world’s largest energy exporter, Kudrin said.
As the U.S. Federal Reserve, European Central Bank and the Bank of England bring their interest rates closer to zero in a bid to pull their economies out of recession, Russia’s central bank is raising rates to dissuade banks from converting rubles into foreign currency.
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