Russian Central Bank Intervenes After Sharp Drop in Ruble's Value

amsterdam - The Russian currency is plunging in value, prompting the central bank of Russia to take action after a sharp decline in the ruble against the euro and dollar.

One of Russia's largest financial institutions, Gazprombank, is among those affected by the depreciation. The exchange rate now stands at over 113 rubles for one US dollar, compared to around 97 rubles earlier this month.

The euro has also seen an increase in value against the ruble.

While a weaker ruble may temporarily boost Russia's export revenues when denominated in rubles, it also fuels the already rising inflation. This comes at a time when Moscow has ramped up its state expenditures for the conflict in Ukraine.

To curb inflation, the central bank raised its key interest rate to 21% last month, with expectations of further increases in December.

In response to the ruble's decline, the Central Bank of Russia announced emergency measures. The drop in value is attributed to concerns over the escalation of the conflict in Ukraine and heightened pressure from new Western sanctions.

Starting Thursday until the end of the year, the central bank will refrain from purchasing foreign currencies in the domestic exchange market. This strategy aims to reduce the circulation of rubles, thereby supporting the currency's value.

Russian Finance Minister Anton Siluanov downplayed worries about the sharp depreciation, stating that the current exchange rate favors exports despite its volatility.