Russia cuts on carry trade concerns

Bank of Russia

The Bank of Russia on Friday slashed its benchmark refinancing rate for the eleventh time since last April, in a bid to encourage lending. The key rate, at 8.5% starting next Wednesday, is now at an all-time low.

The 25 basis point cut was targeted at choking off the carry trade, where investors borrow in markets with low interest rates and place it in countries where rates are higher. It was preceded on Thursday by a $2 billion intervention in the foreign exchange market.

The move appeared to h

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