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. Last Updated: 07/27/2016

Central Bank To Maintain Ruble Range

The Central Bank will try to stop the ruble from strengthening in real terms and will make it progressively more expensive for banks to buy dollars from the Central Bank, a senior bank official said Thursday.


Dealers said the increase in the Central Bank's dollar selling rate would encourage banks not to postpone dollar purchases and thus dampen demand for rubles.


Sergei Aleksashenko, the bank's first deputy chairman, said a real appreciation of the ruble, which was partly due to the upturn in the economy, was not in Russia's economic interests.


The Central Bank would, therefore, stick to its policy of a gradual and pre-announced depreciation of the ruble in a currency range, known as a corridor, he said.


"The Bank of Russia will continue the practical realization of its policy of a slow movement ... in the official rate, which corresponds to the realities of the economic situation," the Central Bank said in a statement released simultaneously.


Aleksashenko said the current situation was similar to that of spring and summer 1995, when the ruble fell 15 percent in nominal terms over three months, while prices rose by 20 percent.


The resulting ruble appreciation in real terms hurt exporters.


"The Bank of Russia does not believe it possible to allow a repetition of this kind of influence of market forces on the ruble rate," the Central Bank statement said.


But foreign exchange dealers ignored the comments. Rubles for today delivery firmed to 5,745 per dollar from Wednesday's closing 5,751.


Dealers say strong demand for Russian T-bills from Russian and foreign investors is pushing up the ruble.