Unit 2 & 4: Monetary Policy, Exchange rates and Russia

All,

I really hope you have been keeping up to date with the economic crisis facing Russia at the moment. As you can read in this article, the Russian Rouble is in free fall. This has huge implications for the Russian economy. The central bank is trying to reverse this trend by raising interest rates to a massive 17% (compared to 0.5% in the UK).

This could have a devastating effect on the average Russian trying to survive the economic crisis. This article is also loaded with information.

Questions to discuss include:

Why is the Rouble depreciating?
How will raising the interest rate stop this fall?
What impact will the rise have on the other major objectives?

This is so similar to 'Black Wednesday in the UK. Read this article from the BBC. Economic policy repeating itself......did it work then? Will it work now?

I welcome your thoughts.