Russian stocks firmed during the week. The gains were supported in part by rising oil prices, which stemmed in turn from increased Middle East tensions and expectations that U.S. sanctions on Iran would soon significantly reduce Iranian crude supplies on world markets.
The ruble also benefited from these developments, as well as an unexpected interest rate increase on September 14. The Russian central bank had been in a rate-cutting cycle since 2014, reducing its key interest rate by 975 basis points (from 17% in December 2014 to 7.25% in March 2018) in view of a falling inflation rate and to support the economy due to U.S.
sanctions and falling oil prices. But this previous Friday, the central bank lifted its key interest rate for the first time since 2014, from 7.25% to 7.5%, in an effort to control inflation and support the ruble. Year-to-date through the end of the August, the ruble had fallen about 14.5% versus the U.S. dollar.
Source: G&T
