Increasing the key rate to 12% per year is seen as a temporary measure that can stabilize the current imbalance until markets find a new equilibrium. It is unlikely to produce a lasting strengthening of the ruble, according to Sergei Dubinin, the former head of the Bank of Russia, who spoke with socialbites.ca. He argues that pushing the policy rate higher can help hold the exchange rate in a corridor of roughly 90 to 95 rubles per dollar for several months, but it won’t restore the ruble to pre-crisis levels on a sustained basis.
Dubinin notes that the central bank has limited leverage to maneuver beyond rate adjustments. The key step may be a rate increase, yet this alone does not guarantee a stronger ruble. Instead, the move is likely to buy time as markets reprice credit costs and participants reassess their positions. Importers might delay official and parallel imports to gauge whether the higher cost of funds will translate into better sale conditions for future imports. The central bank’s actions can maintain the currency corridor set by Maxim Oreshkin, yet they do not indicate a return to the 50-60 ruble range. This perspective highlights a pragmatic view: policy tools can stabilize near-term dynamics, but structural factors will determine the longer-run path of the ruble.
Dubinin adds that another lever to support the ruble could be the sale of foreign exchange earnings held within the country. He cautions, however, that sales routed through banks not subject to sanctions could pose logistical and regulatory challenges. This approach would require careful coordination across financial institutions to ensure that currency conversions align with domestic demand for ruble payments while also addressing sanctions-related constraints. The discussion underscores the practical hurdles the system faces when attempting to convert offshore earnings into domestic use while preserving financial stability.
According to the economist, exporters—especially oil corporations, oil product producers, Gazprom, and other energy-related firms dealing with liquefied gas—repatriate a portion of their foreign currency revenues to access dollars without fully converting them in Russia. They maintain liquidity by holding dollars offshore rather than using domestic markets to reinvest. This flow is driven by the need to cover substantial costs for equipment and transportation within the country. The idea of compelling a full domestic sale and re-accumulation of foreign currency uses could be technically feasible but would depend on which banks can process these transactions in a sanctions-compliant manner. Dubinin notes that implementing such a rule would hinge on the capacity of non-sanctioned banks to handle the volume and ensure compliance with international restrictions. In his view, this is a complication the system can manage with the right regulatory framework, provided the authorities balance deterrence with operational practicality. He stresses that not only the Bank of Russia but also the government have paused, enacting a measured pause rather than a dramatic shift: a sharp rate increase, a pause in dollar purchases, and a gradual move to convert dollars into rubles. This nuanced stance reflects an aim to avoid destabilizing the financial system while still controlling inflationary pressures and preserving market expectations.
On August 15, the Bank of Russia raised the policy rate from 8.5% to 12% per year. The stated purpose was to create monetary conditions compatible with a controlled domestic demand trajectory that would bring inflation back toward the target near 4% in 2024 and anchor it thereafter. In the wake of the rate increase, the ruble briefly weakened, trading around 98 rubles per dollar. Following the move, the leadership of the Bank of Russia signaled that the policy rate could be raised again if inflationary risks intensify. This stance reflects a cautious, responsive approach to shifting macroeconomic realities and the need to preserve credibility with financial markets while steering inflation toward the desired path.
Earlier assessments discussed how a depreciating ruble could influence the broader economy, including domestic demand, investment sentiment, and the balance of payments. Analysts continue to monitor how exporters adapt to the new pricing environment, how importers time purchases, and how the central bank and government coordinate to sustain stability during a period of adjustment. The conversation remains focused on balancing inflation control, currency stability, and the growth outlook, with attention to potential spillovers into energy sectors, production costs, and consumer prices. As markets evolve, observers expect ongoing dialogue between policymakers and market participants to align expectations with policy actions, ensuring that moves in the key rate translate into measured changes in financial conditions and real economic activity.