Chart Of The Day: Russian Ruble Boosted On Rising Rates, Energy Prices

Chart Of The Day: Russian Ruble Boosted On Rising Rates, Energy Prices

Consensus has Russia's central bank keeping interest rates unchanged—at 4.25%, a record low—when fiscal policymakers release their next on Friday. Rates have remained at that level since July 2020, in effort to stimulate the country's economy, which shrank not only because of the coronavirus, but also because of the concurrent crash in the price of .

Russia exports more than 70% of its oil production, which, together with , accounts for more than a third of the country's GDP.

Last month, the central bank declared it was ending its monetary easing cycle. This is nothing less than a dramatic development from the country's policymakers, as the Bank of Russia may be one of the first emerging markets to increase rates since the start of the pandemic.

The policy change comes after pressure had been building on Governor Elvira Nabiullina to begin tightening after two years of the record low rate. Analysts at Morgan Stanley and Citigroup were among those that have been warning that the recent selloff—the result of threats of international sanctions agains the Kremlin because of the poisoning, then jailing of activist Alexei Navalny—exacerbated inflation amid soaring food prices.

To that effect, derivative traders more than doubled their bets on