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. Last Updated: 07/27/2016

Ruble Low Not Seen as Linked to Poll

The ruble fell to a record low on one Moscow exchange Friday, but dealers said the fall -- at an exchange which used to set the benchmark for the currency -- had nothing to do with Russia's presidential election.


The Central Bank has been guiding the ruble lower for months and the rate of 5,134 rubles per dollar on the Moscow Interbank Currency Exchange is well within the bank's Wednesday corridor of 5,011 to 5,611.


The previous MICEX low was 5,130 rubles per dollar, set at the end of April 1995. The MICEX rate was 5,119 Thursday, the first trading day after voters swept Boris Yeltsin back into the Kremlin for a second term.


But dealers said the ruble was rising in interbank trade as banks sought money to buy Russian treasury bills.


"Both local and foreign banks have put money into T-bill trading and sold hard currency for this," said Tokobank dealer Stanislav Chernyakov.


MICEX was for a long time the main indicator of the ruble's strength, and the Central Bank used the MICEX rate for its own dollar-ruble benchmark. But the rate lost significance when the central bank introduced a new currency regime this summer.


"MICEX stopped being a rate-setting institution after the Central Bank changed its policy," said Aljba Alliance chief dealer Dmitry Slobodnik. "The ruble will fall until exports prevail in the Russian economy."


The Central Bank now polices the ruble tightly, and will allow the currency to depreciate gently from 5,000 to 5,600 on July 1, to 5,500 to 6,100 on Dec. 31.


Central Bank policy aims at preventing too rapid a fall in the ruble to avoid importing inflation. But the Central Bank action means that the currency market rarely reacts to political events.