Russian Ruble in the News again as Central Bank Cuts Rates by 2%

The final trading day of the month brings in another central bank surprise. The Russian ruble has been sent into another tailspin by the Bank of Russia as it cut key interest rates by 2% in an unexpected move.

What has been the most volatile month on the foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term markets since the dawn of the financial crisis in 2008, could finish on a worrying note for the capital markets. The Bank of Russia has just proven that it's nowhere close to independent, by issuing a very controversial statement accompanying the decision.

According to the Russian central bank, the decision was taken due to the ongoing "shift in the balance of risks of accelerated consumer price growth and cooling economy." Granted, the central bank's dramatic action on the 15th of December, 2014 played a role, but the judgement that an interest rate hike did its job in 6 weeks is rather puzzling.

The Bank of Russia highlights that the primary factor for the increase in inflation has been the depreciating ruble, which is quite correct. However, the central bank steps a notch further saying that the "accelerated price adjustment to the ruble depreciation is time-limited."

On Monday, Forex Magnates published a short analysis of the current Russian situation outlining a Standard & Poor's downgrade and the case for extreme Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term in the Russian ruble. The scenario has just materialized in full force, possibly prompting action by some brokers with regards to Russian ruble trading and margin requirements in the coming days.

The Russian ruble is trading around session lows at 71.40, which is lower by 4% on the day. Throughout January the currency has depreciated more than 17% as of current rates.