Russia's central bank on Wednesday launched another initiative to shore up the ruble, offering hard currency loans to help companies and banks service their debts.
Stabilizing the ruble, which is one of the world's worst-performing currencies this year following the slide in oil prices and the sanctions imposed on Russia for its involvement in Ukraine, is a priority for Russia's monetary authorities.Russia's largest lender, Sberbank, admitted again that it faced a run last week when the ruble was in freefall and individuals fretted over the value of their deposits. Its chairman, Alexander Torbakhov, conceded to Russian news agencies that the bank was "ready for a new wave of panic." In an attempt to manage the financial impact, the bank raised the rates being offered on deposits and mortgages.
Containing the ruble crisis is behind the Central Bank's latest measure to accept foreign currency debt obligations as collateral against the loans. The hope is that it will provide relief to those who can't tap foreign capital markets to refinance loans because of Western sanctions.Other measures taken include last week's increase in the Central Bank's main interest rate to a whopping 17 percent in the hope that it makes holding rubles more attractive for traders.And in a bid to boost hard currency offering at the markets, the government has encouraged major companies to sell more hard currency. On Tuesday, it formally instructed five of the country's biggest state-controlled exporters to reduce their foreign currency assets to October levels and to not raise them again until March.
The measures may be meeting with some success. The ruble has been trading around the 55 mark against the dollar for much of this week having slid at one point last week to around 80.At the height of last week's ruble rout, there were growing fears of a run on the banks as frightened individuals worried about the value of their deposits.However the ruble performs over the coming days and weeks, the Russian economy is predicted to fall into recession next year. Some, like ex-Finance Minister Alexei Kudrin, are warning of a full-blown crisis.