Ruble Strengthens Past Support Level

The ruble strengthened versus the dollar/euro basket Monday, and dealers said the Central Bank allowed the move to combat inflation further.

The ruble stood at 29.31 against the basket just before the market close, compared with 29.41, which was previously seen as the Central Bank's support level.

It was nearly 15 kopeks stronger compared with Friday's close of 29.45. The ruble fell to a low since the spring of 1999 against the dollar, closing at just under 23.15.

The Central Bank has allowed the ruble to strengthen twice already this year, and it has indicated that it will continue to widen the trading corridor without naming its new parameters.

Alexei Moiseyev, an analyst at Renaissance Capital, said analysts and government officials widely believed that an appreciation of 10 percent leads to a cut in the rate of inflation by 3 percentage points.

"The [Central Bank's] argument is pretty simple. If you have currency appreciation anyway, it is better to have a nominal appreciation than an appreciation via inflation," he said.