The Russian ruble fell above 58 to the dollar today, hitting its weakest point of the day, just after the central bank cut interest rates for the fourth time this year by 150 basis points to 8%, a bigger-than-expected cut. .
The ruble was 1.9% weaker against the dollar at 57.74, after briefly reaching 58.14 in the minutes after the bank’s decision. Against the euro, it fell 1% to 57.79 on the Moscow Stock Exchange.
The ruble has become the world’s best-performing currency so far this year, boosted by measures – including restrictions on Russian households withdrawing foreign currency savings – taken to shield Russia’s financial system from Western sanctions that were imposed after Moscow sent troops to Ukraine on February 24.
Before February 24, the ruble was trading near 80 to the dollar and 85 to the euro.
The ruble’s strength has worried officials as it reduces Russia’s revenue from exports of commodities and other goods priced in dollars and euros.
To ease upward pressure on the currency, Russia relaxed some capital controls this week, allowing banks from designated “unfriendly countries” to trade between foreign currencies on Russian foreign exchange markets.
The central bank, which supports the idea of a free-floating ruble, has further reduced upward pressure on the currency over the long term by cutting interest rates and thereby lowering ruble-denominated bond yields.
The finance ministry plans to return to OFZ bond lending in September, following the discontinuation of weekly bond auctions in February.
In stock markets, the RTS dollar index was 0.1% lower at 1,140.9. Russia’s ruble-based MOEX index rose 1.8 percent to 2,089.7 points.