In an effort to further stabilize the ruble, the Bank of Russia said on Wednesday it will begin helping companies cover their foreign debts following Western sanctions that have cut much of the country off from Western capital markets.
The central bank recently hiked its benchmark interest rate from 10.5 percent to 17 percent, and announced on Monday that it will provide a 30-billion ruble loan to help the Trust Bank continue operating as normal. Other stabilization efforts include forcing state-controlled businesses to sell excess foreign currency, reported The Associated Press.
Now, the bank says it will provide dollar and euro loans to banks so they can help major exporters who need foreign currencies to continue their operations, essentially taking on credit risk for the companies.
Economic sanctions have blocked many Russian companies from participating in Western capital markets, and it can become difficult for companies that have to repay or refinance debts in dollars or euros, especially with the decline of the ruble.
Experts say that measures taken to stabilize the ruble, one of the worst-performing currencies this year, appear to be working.
The currency stabilized Wednesday and has been trading around the 55 mark against the dollar over the past few days. Around 40 percent of its value has been lost against the dollar this year as a result of a decline in oil prices and economic sanctions imposed by the West.
The Standard & Poor's credit rating agency put Russia on notice on Tuesday, saying it could face a downgrade to "junk" status as soon as January due to "a rapid deterioration of Russia's monetary flexibility and the impact of the weakening economy on its financial system," reported Financial Post.
