Russia's central bank doubles key interest rate to 20% to save nosediving Ruble

Russia's central bank, on February 28, increased the country's key interest rate from 9.5% to 20%. The Central Bank of the Russian Federation made this announcement on its official website on Monday, following Ruble hitting a record low against the dollar on the back of a slew of new sanctions and penalties imposed on Russia by Europe and the U.S. for its invasion of Ukraine.

On Monday, the Ruble stood at Rs 0.75 and USD 0.0100 for 1 Ruble.

The Bank of Russia Board of Directors has decided to increase the key rate to 20% per annum starting on February 28 2022. This move has been taken in an attempt to ensure a rise in deposit rates to levels needed to compensate for the increased depreciation and inflation risks.

The release further said that the key rate decisions would be made taking into account risks posed by external and domestic conditions and the reaction of financial markets, as well as actual and expected inflation movements relative to the target and economic developments over the forecast period.

"A statement by the Governor of the Bank of Russia in follow-up to the Board of Directors meeting is to be delivered on February 28, 2022, at 16:00 Moscow time", the Russian release reported.

A Reuters report mentioned that the Russian finance ministry and the central bank plans to order domestic exporting companies to sell their foreign exchange revenues from February 28, they both said in a statement on Monday.

The exporters should sell 80% of all forex revenues they are receiving under their export contracts, the statement said as per Reuters' report.