Russian central bank plays down stability risk from sanctions

Russia's Central Bank chief Elvira Nabiullina holds a press conference in Moscow on March 24, 2017
AFP

Moscow (AFP) – Russian central bank chief Elvira Nabiullina said Tuesday that the country’s economy could withstand the latest US sanctions, even as the ruble continued its spectacular plunge against the dollar and the euro.

“The central bank has a broad spectrum of instruments in order to act in such situations, if risks arise to financial stability. In our view, there are not such risks now,” Nabiullina told a conference in Moscow.

“There is no need to take some kind of systemic measures. Of course we will follow the situation and possibly introduce some revisions if necessary,” she said.

She said the central bank would be able to limit the influence of sanctions on the country’s currently historically low inflation while acknowledging that the currency’s value was a factor. 

“We have worked out all the instruments, most importantly our policy on the interest rate, which allows us to limit the influence of this kind of event on inflation,” she said.

The US announced fresh sanctions on Friday following the diplomatic crisis sparked by the poisoning of former spy Sergei Skripal.

The sanctions hit oligarchs close to President Vladimir Putin, prompting the share price of Russian aluminium giant Rusal founded by Oleg Deripaska to collapse on Monday.

The US move also prompted the ruble to fall on Monday and its plunge continued Tuesday, taking it to lows against the euro and US dollar not seen since 2016.

The euro exceeded 78 rubles for the first time since April 2016 and the dollar went over 63 rubles for the first time since December 2016 on the Moscow foreign exchange market on Tuesday morning, Interfax news agency reported.

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