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“A rate hike is an inevitable thing. It could have been done earlier. I believe the Central Bank may decide on a further rate increase,” Klepach said in an interview with Rossiya-24 TV Channel.
On December 16, Russia’s Central Bank raised its key rate to 17% from 10.5% in a bid to stem the ruble’s biggest fall in the past 15 years.
The VEB deputy head said, however, “a rate alone cannot remedy the situation.”
“It is very important that exporters should be confident and ready to sell foreign currency revenues. In the conditions when there are delays (in the sale of exporters’ hard currency earnings) and when banks’ clients purchase foreign exchange to hedge against a fall (in the ruble exchange rate) and create reserves for the repayment of debts (estimated at $100 billion next year), then apparently what was needed was trust and coordinated actions so that foreign currency could be sold,” Klepach said.In this regard, the Russian government could repeat actions, which it took during the crisis period of 2008-2009 when it provided guarantees for reserving funds in foreign currency for urgent foreign debt repayment.
Also, “the oil prices, despite their fall, are sufficient in any case for a foreign currency inflow to prevent a ruble slump,” the expert said.
‘It is very important to ensure coordinated actions by business, the Central Bank and the government, which should help find a dialog,” the economist said. “Foreign currency is potentially available to prevent the ruble’s sharp falls,” he said.
As for the Russian presidential aide Andrey Belousov believes that the Bank of Russia should lower the key rate from the current 17% as soon as the situation permits.
“The way I see it, the sooner, the better. As for when — as soon as the situation permits. I believe nobody will be able to predict now,” Belousov said.
“It is important to ensure the restrictions on liquidity should not develop into a crisis of ruble liquidity,” he remarked.
Belousov acknowledged that the interbank market was frozen at the moment, which was well expected at a key rate of 17%, and nobody had anticipated a different march of events.
“The Bank of Russia is now taking measures to minimize the negative effects of this situation,” Belousov said.