The ruble extended its losses, declining by 1 percent to 54.2 against the U.S. dollar. (AP Photo/Alexander Zemlianichenko)
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Pressure is building on Russia's central bank to support the ruble via a big rise in interest rates at this week's policy meeting, as money markets price in sharply higher funding costs in the coming months.Three-month forward rate agreements, which allow traders to lock in existing market interest rates for six months, have jumped to 16.5 percent – up 1.5 percentage points from the end of last week and 400 bps higher than end-November levels.What that means is that ruble deposit rates starting three months from now and lasting six months will rise to 16.5 percent – seven percentage points above current official lending rates. Official rates have been raised by 400 bps already this year.
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