12.09.202511:03:53UTC+00Russian Ruble Surges after Softer Rate Cut

On Friday, the Russian ruble climbed past 82 to the US dollar, recovering from an earlier five-month low of 85, following a decisive move by the Bank of Russia. The central bank made a smaller-than-expected reduction in its benchmark interest rate, cutting it by 100 basis points to 17%, rather than the anticipated 200 basis points. This decision comes despite a downward revision in the country's growth forecasts earlier this year by the Central Bank of Russia (CBR). Monetary authorities highlighted that inflation expectations remain high and that labor markets continue to be tight, justifying a cautious approach to interest rate reductions. This year, the ruble has found support through capital controls mandated by the Kremlin, which require companies to sell 40% of their export revenues, although the Kremlin reports that firms are selling 70% of their earnings. Nevertheless, the ruble remains weaker than its peak of 76 earlier this year, due to concerns over economic growth and declining exports. According to the International Energy Agency (IEA), oil and fuel export revenues saw a decline in August, attributed to reduced demand from China and challenges from India, which is grappling with tariffs imposed by the US.