The ruble rose sharply after Bloomberg reports

On Tuesday, the Bank of Russia took the unexpected step of significantly increasing its key rate.

The Russian currency did not benefit much from the policy being tightened.

At the conclusion of the day, the ruble made efforts to gain strength, according to Bloomberg reports.

At an unexpected meeting on Tuesday, the Bank of Russia increased the key rate by 350 basis points, from 8.5% to 12% per annum, in order to reduce the risks to price stability.

The Central Bank reported that inflationary pressure is still on the rise, with the annual inflation rate reaching 4.4% as of August 7. Additionally, the rate of price growth has been accelerating, with the average annualized price growth over the past three months amounting to 7.6%, adjusted for seasonality.

After the regulator's decision, the ruble began to weaken, causing the dollar to increase by more than 3 rubles and currently stand at over 99 rubles per dollar.

The press service of the Central Bank reported later that the Bank of Russia has the authority to further raise the key rate if there are heightened pro-inflationary risks.

The Alor Broker investment company notes that an increase in the key rate will not be able to immediately rectify the imbalance in the foreign exchange market. Despite this, importers will still be actively purchasing foreign currency to fulfill existing contracts.

Tinkoff Investments states that the current environment's rate increase only has an indirect effect on the ruble exchange rate, which is seen through a decrease in lending activity.

On Tuesday, the Russian Finance Ministry cancelled OFZ auctions due to the volatility in financial markets. This decision caused the price index of Russian government bonds (RGBI), the main indicator of the Russian Federation's government debt market, to plummet following the Central Bank's rate announcement.

On Tuesday, the ruble rose sharply in the last hour of trading following reports from Bloomberg. This caused the dollar to lose almost 2 rubles, resulting in a decrease of 57 kopecks, bringing the day's end rate to 97.09 rubles.

A meeting between the government and exporters on Monday did not reach an agreement, however, the Russian Federation may still partially reinstate the requirement to sell export earnings, according to sources. Another meeting may be held later this week to further discuss the measure.