August 26, 2015 / 12:11 PM / 4 years ago

UPDATE 1-Moldova's central bank raise main interest rate to 19.5 pct

(Adds detail on monetary policy changes, quote)

CHISINAU, Aug 26 (Reuters) - The Moldovan central bank raised its main interest rate to 19.5 percent from 17.5 percent on Wednesday in a further bid to control inflation, its sixth increase since the start of 2015.

Along with other former Soviet republics, Moldova has been hit by an economic downturn in Russia, a key trading partner, triggered by the Ukraine crisis and a plunge in oil prices.

“Weak economic activity in the euro zone, Russia’s recession ... (and) a fall in remittances and exports are factors influencing the rise in inflationary pressure,” the central bank said in a statement.

Central bank Governor Dorin Dragutanu said inflation accelerated to 8.6 percent in July and could reach 11.2 percent by the end of 2015, compared with a target of 5 percent.

The bank also raised the rate on overnight loans and overnight deposits by 2 percentage points to 22.5 percent and 16.5 percent respectively.

Bank reserve requirements for the national leu currency were raised 3 percentage points to 35 percent, coming into effect from Nov. 7. The leu has weakened over the past year from 14 to the dollar in mid-2014 to the current level of around 19.

Reporting by Alexander Tanas; Writing by Alessandra Prentice; Editing by Mark Heinrich

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