Russia’s Central Bank will meet today as the country faces declining foreign reserves and a weakened economy – Photo: Reuters/Maxim Shemetov

The board of directors of Russia’s Central Bank will meet today in Moscow.

The meeting will be held to decide if any changes will be made to the Bank’s interest rate. The interest rate has remained at 7.5% since last September, down significantly from last March’s record high of 20%. The Bank’s foreign exchange reserves have declined by $22.8 billion since January due to reduced revenue drawn from energy  exports and the sale of billions of rubles worth of Chinese yuan. The depletion of  foreign reserves and reduced exports due to Western sanctions have caused the ruble to depreciate by 20% compared to the dollar and have fueled a domestic inflation rate of almost 11%.

Russia’s Central Bank will likely keep the interest rate at 7.5% in order to avoid tipping the country’s already weakened economy into a recession. The interest rate will likely remain the same for the rest of the year if domestic inflation remains under control, although this will depend on how long Russia’s foreign exchange reserves last. The forced shift to the Chinese Yuan as a key Russian reserve currency will likely give China more financial leverage over Russia in the coming decade and tip the balance of power between the two countries further in China’s favor.