Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Ruble Stabilizes After Reform Turmoil

The exchange rates offered by commercial banks and street traders for cash rubles rose Wednesday, coming back into line with official trade on the Moscow Interbank Currency Exchange (MICEX) Wednesday, where the ruble continued to firm, rising to 992 to the dollar.

Commercial banks which hiked their rates to 1, 500 and even 2, 000 per dollar on Saturday after the shock currency reform said Wednesday that they were reducing their rates to move back closer to the official exchange rate.

Most said they were changing cash at the rate of about 1, 000 rubles to the dollar, back to last week's level. This followed gradual reductions on Monday and Tuesday.

Traders said that the reason for the jump on Saturday had been the fact that people were willing to sell their old rubles at any price for fear of not being able to exchange them for new ones.

Even though most banks stopped accepting old rubles on Monday, they have profited from the panic and have not been in a hurry to lower their rates, even for new rubles which were not affected by the money reforms.

Nikolai Gusev, senior analyst with MICEX, said high exchange rates offered by commercial banks Monday had nothing to do with real monetary trends. "The banks simply tried to use panic and make some money", he said.

The Moscow branch of Sberbank, the only bank which is still exchanging dollars for old ruble notes, has maintained its rates high at 1, 265, charging a premium for taking old notes.

But the strength of the ruble in official trade on the MICEX has been forcing banks to return to the lower rates over the past two days.

"We reacted to the results of trading sessions at MICEX", said an official with MSB bank's exchange office. "The ruble's rise will continue, at least for a little while", he added.

MSB decreased the exchange rate from 1, 250 on Monday to 1, 040 on Wednesday. So did Vserossiisky Birzhevoy Bank, which reduced its rate from 1, 140 to 1, 040.

The strength of the official ruble exchange rate over the past few days has surprised many observers who expected it would be driven down against the dollar by the panic following the ruble reform. According to Reuters, some traders said the Central Bank was supporting the currency.

The volume of Wednesday's trade was an all-time record at $95. 8 million, meaning that any intervention by the Central Bank would have been very expensive. Alexander Khandruyev, deputy chairman of the Central Bank said Wednesday that the bank had intervened over the last few days but not to support the ruble. He said it had acted to stop the dollar falling further by selling rubles.

Gusev, said that the exchange was isolated from the panic of the money reform because it dealt with non-cash rubles.