Rouble tanks despite Russia's 17% interest rate bomb

As the rouble collapses, Russia raises interest rates 6.5% overnight. You don't see that at MPC meetings...

by Adam Gale

While Russia slept last night, its central bankers convened in a Moscow boardroom. Their concern was to halt the freefall in the rouble, which had lost 13.6% of its value in one day. The solution they came up with was as drastic as it was unexpected. At 1am, they increased the interest rate in Russia from 10.5% to 17%, in what could fairly be called a fell swoop.

At first, it seemed to have the desired effects. The rouble did rally for a couple of hours, hitting 59.8 to the dollar from a low of 65.9. But it didn’t last. It's now at an all time low of 78.3.

So why didn’t it work? Interest rate rises typically help a currency appreciate against others, because they incentivise people to hold onto and acquire that currency so they can benefit from those high rates of return. In this case, however, a gloopy mixture of low confidence and cheap oil has spoiled the party.

Sign in to continue

Sign in

Trouble signing in?

Reset password: Click here


Call: 020 8267 8121



  • Up to 4 free articles a month
  • Free email bulletins

Register Now

Get 30 days free access

Sign up for a 30 day free trial and get:

  • Full access to
  • Exclusive event discounts
  • Management Today's print magazine

Join today