MOSCOW, Nov 28: Russia on Friday announced a one per cent rise in its key interest rate and allowed the ruble to weaken further, as it sought to protect itself from the worst effects of the global economic crisis.

The Russian central bank raised its key refinancing interest rate to 13 per cent from 12 per cent to curb capital outflows that have seen investors shift tens of billions of dollars out of the country.The raise in rates aims to “lower the level of capital outflows and contain inflationary tendencies” and will take effect on December 1, the bank said in a statement.

The increase comes just over two weeks after the bank on November 11 raised the refinancing rate by one point, again citing concerns on capital flight and inflationary pressures.

Russian growth is forecast to drop sharply in the wake of the economic crisis and the ruble has also come under huge pressure, forcing the bank to spend tens of billions of dollars propping up its value.

In a separate but related move, the bank allowed the ruble to lightly weaken within the corridor it sets against the dollar-euro basket that serves as its benchmark. “The Bank of Russia from Friday widened the technical corridor, as on the previous two occasions, by 30 kopecks on both sides” deputy central bank head Alexei Ulukaev said, according to the RIA Novosti news agency.

The modest weakening aims at taking the pressure off the ruble and limiting the bank’s spending to prop up its value.—AFP