Rouble faces pressure of US sanctions

Russia’s central bank kept borrowing costs unchanged, pausing despite persistent inflation risks after a surprise hike last month.

The key interest rate will stay at 7.5 per cent, according to a statement yesterday.

Earlier, on the eve of Russia’s interest-rate decision, markets got a taste of rouble traders’ nerves.

Merely an appearance that US National Security Adviser John Bolton was striking a conciliatory tone on sanctions on Wednesday was enough to catapult the Russian currency from losses to an intraday gain of almost 1 per cent.

But once it became clear his comments weren’t so optimistic, the speculation that Washington might hold off on further penalties rapidly evaporated, leaving the currency down for a second day against the dollar.

The rouble’s sensitivity raises the question of just how much the measures of support deployed at the last gathering have accomplished. Halting a foreign currency buying programme and surprising markets with the first rate hike since 2014 contributed to the rouble’s 4 per cent rebound since the September decision. But as much as half the appreciation came from a weaker dollar, according to ING Groep NV.