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. Last Updated: 07/27/2016

Ruble Firm on Day Before Forex Trade Rules Eased

Russia's ruble was steady Monday even as the Central Bank prepared to abandon one of the chief bulwarks of currency stability, a special session where the bank corners the market on dollars.

The Central Bank set the ruble at an unchanged 24.22 per dollar for Tuesday, based on results of the final special trading session, where it buys dollars from exporters.

The currency was bid a firmer 24.37, against Friday's 24.39 average, in later open trade on the Moscow Interbank Currency Exchange, which will be the only session beginning Tuesday.

The ruble has lost three-quarters of its dollar value since Russia effectively devalued on Aug. 17, 1998.

But with signs of economic growth, a boom in tiny markets hungry for rubles and many strict controls on ruble trading still in place, traders and analysts are calm, and there are no lines outside exchange booths, which were swamped last autumn.

The only cloud is a huge overhang of rubles on banks' accounts, which most analysts say is unlikely to be a problem.

In fact, the ruble has climbed steadily for months, with the exception of a sharp fall when Prime Minister Yevgeny Primakov was sacked, to the current 24.22 per dollar from its high of 25.12, set April 7.

"We expect we will be able to keep the fluctuations of the ruble exchange rate on the level of 24 to 25," Central Bank chairman Viktor Gerashchenko said recently.

The Central Bank will end the special session where it and importers had exclusive rights to buy hard currency from firms required to sell up to 75 percent of export revenues.

The Central Bank bought dollars from a captive market, sells as necessary on the more open one and sets the official rate.

Now, banks that have largely been sidelined to an open session where the ruble has been weaker will get access in line with exporters as foreign exchange trading is unified.

But traders did not expect a sharp drop in the ruble. "The Central Bank has various administrative and economic tools to keep the rate where it needs to," one said.

He said banks manage to avoid some restrictions on holding dollars, but their power is dwarfed by the Central Bank, and the closed session volume is generally twice that of the open one.

The unified session will bring Russia in line with International Monetary Fund rules on currency conversion, an important step toward a new $4.5 billion fund credit.

Peter Boone, head of research at Brunswick Warburg, said Russia's situation had changed fundamentally because some banks had weathered the crisis and are solid, while markets, though thinly traded, are a good investment. "There may be a few more people entering who want to buy dollars, but the market trend is for the ruble to be much stronger rather than weaker," he said.