Question

1. Because of sanctions over their involvement in Ukraine in 2014, the Bank of Russia has raised its benchmark interest rate from 8% to 9.5%. What affect does this have on the exchange rate for the Russian Rubble versus the Euro

Answer 1

This would make the rubble more attractive than the euro when investing.

Explanation: The effects of this increase in interest rate, is it would make it more expensive when planning on borrowing money in Russia. Which would make the rubble more attractive than the euro from an investors or investment part, as more money can be made when euro is converted back to rubble. This would help drive up the cost of rubble.