Russian financial crisis

Russia's central bank yesterday raised its key interest rate by 3.5 percent, a move designed to fight inflation and strengthen the ruble after the country's currency reached its lowest value since early in the war with Ukraine.

The decision was announced after an emergency meeting of the bank's board of directors was called a day earlier as the ruble declined.

Last year was regarded as a new milestone after the 2008-2009 crisis. The expansionary monetary policy adopted to overcome the crisis was to end with the U.S. Central Bank, the Fed, hiking rates, supposedly ushering in a new era.

The ruble hit a historic low on Jan. 20 as the dollar climbed past the 80.1 rubles level for the first time, exceeding the levels seen during the shock plunge of the Russian currency in December 2014.

Azerbaijan's Central Bank has suddenly devalued the country's currency by 33.5 percent against the dollar.
                   
Like Russia, Azerbaijan has been hurt by the sharp decline in the price of oil, its main export. Russia's currency has lost more than half of its value in the past year.
                   

Standard and Poor's stripped Russia of its investment-grade rating on Jan. 26, cutting it to "junk" status with a warning of weak growth.

"The downgrade reflects our view that Russia's monetary policy flexibility has become more limited and its economic growth prospects have weakened," the ratings agency said in a statement announcing the one-notch cut to a 'BB+' rating.

The ruble rallied in early trading Dec. 18 ahead of President Vladimir Putin's eagerly-awaited annual press-conference, where he is expected to give his views on the financial crisis rocking Russia.
      
The ruble was trading at around 58 to the dollar and 72 to the euro -- the levels of last Friday -- after closing at 60.65 to the dollar and 75.10.
      

Russia stepped up its defense of the ruble Dec. 17 as it sought to halt a run on the currency and stem the worst financial crisis of President Vladimir Putin's 15 years in power.

Russia's central bank announced on Tuesday it increased its key lending rate to 17% with immediate effect to avert a currency crisis.

The rouble on Monday posted its biggest one-day drop versus the US dollar and the euro since 1999. The Russian currency traded 5.22 roubles lower to the dollar at 63.4 and 6.53 rubles lower to the euro at 78.81.

Russia is set to lose around $40 billion (32 billiUon euros) per year due to Western sanctions over the Ukraine conflict, Finance Minister Anton Siluanov said Monday.