The ruble has plummeted to its lowest point since Russia invaded Ukraine in February 2022 and could force the central bank to increase its key lending rate, according to a report.
The ruble has fallen more than 9% against the dollar since Nov. 21 when the U.S. slapped sanctions on more than two dozen Russian banks, Bloomberg reported.
In response, the Bank of Russia has been raising interest rates to record highs to curb inflation.
The bank has said it is prepared to hike the cost of borrowing further - now at 21% - to whatever rate is necessary to cool inflation and bring it back to the 4% target level, the report said.
That could mean a jump to 25%, according to Bloomberg Economics estimates.
"The central bank faces a dilemma: should it hike interest rates further, even though that lifts the risk of recession, or just accept higher inflationary pressure," said Alex Isakov, BE's Russia economist.
"Policymakers will probably opt for the former," Isakov added.
Russian officials have downplayed the weakened ruble, noting that it has been advantageous to exporters.
But the central bank may be forced to act because inflation is running so high, despite the risks, the report said.
"There are many seasonal factors" at play, President Vladimir Putin said at a news conference on Thursday.
"The situation is under control, and there are certainly no grounds for panic," he said.
The Russian leader also pointed out that there are other "instruments" to fight inflation, but noted that it's the central bank's decision.
Originally published in International Business Times.
