RUSSIA CUTS INTEREST RATE, MAKES BOND PAYMENT IN DOLLARS

On 29 April, Russia’s central bank trimmed its key interest rate for the second time during that month, dropping it from 17 percent to 14 percent.

The bank had doubled its rate to 20 percent to defend the ruble after Russia attacked Ukraine and Western countries froze half the bank’s foreign exchange assets.

The bank also imposed capital controls to keep investors from taking money out of the country and required exporters to convert 80 percent of their foreign exchange revenue to rubles.

Although those measures have supported the ruble, Russia’s economy will contract by 8 to 10 percent this year, the bank predicted, echoing the International Monetary Fund’s forecast.

Inflation in Russia will shoot to between 18 and 23 percent, bank analysts said, because of the war claiming resources and Western bans on selling goods into Russia.

Also late last month, Russia made $650 million in bond payments in dollars, days before a 30-day grace period ran out. If the payments had not been made, creditors could have declared Russia to be in default.

The payments were made through Russian banks not under sanction and reversed Russia’s stated plan to make the payments in rubles.

PUBLISHER’S NOTE: Some sanctions against Russia are structured to leave both it and Western allies loopholes so nothing financially catastrophic happens to the West.