Russian Central Bank announces relief measures to protect the ruble

The Russian central bank announced on Wednesday a package of relief measures and is preparing measures to flood banks with money in 2015.

The central bank declared the probability of freezing the valuation of Russian banks’ securities portfolios at the levels they were at before the latest decline in the ruble.

Also, banks will be allowed to charge more for consumer credit, and stop the necessity for banks to immediately report declines in their capital adequacy levels.

“To limit the impact of the revaluation of foreign currency denominated assets and liabilities, the Bank of Russia plans to temporarily allow credit institutions to use the exchange rate from the last quarter in the calculation of prudential requirements in foreign currency operations,” the central bank’s statement said.

The Russia government earlier announced that the Russian finance ministry started selling currency reserves to rescue the ruble, a highly expected action after the ruble’s sharp fall this week.

The central bank also said it has plans to make additional foreign exchange auctions if needed.

First Deputy Governor Ksenia YUdeayeva said the bank’s measures that will include injecting money into banks aim to balance supply and demand in currency markets, which will help a quicker stabilization of the ruble.

These actions, coupled with the earlier intervention in FX markets and the pledge not to enact capital controls, has helped the currency surged more than 12% against the U.S. dollar on Wednesday.

This eases the pressure on President Vladimir Putin, whose popularity highly depends on providing stability and prosperity, and the currency’s free fall has put that at risk by damaging the country’s credibility among investors.