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. Last Updated: 07/27/2016

Ruble Up as Dealers Hail Hint of Forex Reforms




The ruble firmed to the dollar Friday as currency dealers welcomed Central Bank chairman Viktor Gerashchenko's comments that he would scrap the dual exchange rate system.


The ruble eased up to 16.71 to the dollar, from 16.73 Thursday during the tightly controlled morning session on the Moscow Interbank Currency Exchange. At the more loosely regulated afternoon session, the currency traded for 16.73, up from 16.89.


The Central Bank set the official weekend rate at 16.69 rubles to the dollar, a fraction higher than Friday's 16.76.


Dealers said Friday that Gerashchenko's remarks could signal a return to an open currency market.


At a London investment conference Thursday, the Central Bank chief called the two exchange rates an "experiment" and said they would be united in the near future.


Gerashchenko gave no details, but his remarks fueled speculation that the bank would ease controls on the morning session and let the market determine the ruble's value, which is currently based on stronger prices in the morning session.


"That would be fairer for exporters as rates during the special session are artificially low because [dollar] offers often artificially outnumber bids," one currency dealer said.


A dealer at one Western bank said Gerashchenko's comments showed the Central Bank understood the need to abandon the dual rate system, which some economists say harks back to Soviet-style multiple exchange rates.


"The Central Bank has in time apparently understood that ? it is necessary to eliminate the double standard that has been infringing upon the rights of [market participants]," he said.