MOSCOW: The Russian ruble firmed marginally in early trading Friday as the disinclination of market players to pay high borrowing costs following the country’s latest rate climb caused a shortfall in the local currency.
The ruble gained 0.5% to 52.3 against the dollar and strengthened 1% compared with the euro to 63.85, approaching levels last seen in early December.
The ruble has been supported by local month-end tax duties that prompted export-focused companies this week to sell dollars and euros to meet tax liabilities. Money market lending rates, which jumped above 20% from around 10% after the central bank suddenly raised rates last week, also boosted the ruble.
The ruble’s recovery follows a major push by the government and central bank to stabilize the market and has eased fears of a spiraling financial crisis in Russia.
Even so, the central bank’s sharp interest rate increase last week aimed at halting the ruble’s slide, along with widening problems in the banking sector, has darkened the outlook for the Russian economy.
Russia is widely expected to slide into recession next year for the first time in six years, a factor which are already putting the ruble under pressure.
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