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Monday, December 18, 2017

Ukraine instability leads to Russian central bank rate hike

The crisis in Ukraine has led to a hike in Russia's main interest rate by Russia's central bank.

Emergency efforts were taken on March 3 as stocks plunged and the ruble hit historic lows against the dollar and Euro, HurriyetDailyNews.com reports.

As a result, the main interest rate from the Bank of Russia rose to 7 percent from 5.5 percent in order to support the ruble and stem capital flight.

The MICEX stock market, meanwhile, was down 7.81 percent. The RTS bourse dropped by 9.05 percent. There was also a 10 percent drop in stocks in Gazprom, which has a major contract to export gas to Ukraine. Mechel stock also fell dramatically, according to HurriyetDailyNews.com.

Putin could see difficult economic consequences as a result of intervention in Ukraine. Russia was facing growth of 1.3 percent in 2013 prior to the crisis.