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. Last Updated: 07/27/2016

CB Allows Ruble to Slip to 30.6

The ruble eased against the dollar on Thursday for the fourth consecutive day, and dealers said the Central Bank appeared to have opted for a gradual weakening of the currency.

The ruble's weighted average for today settlement eased to 30.6380 per dollar from 30.5999 the previous session.

"The Central Bank is not supporting the ruble. Banks feel the trend has changed," Alfa Bank dealer Alexei Bukleyev said.

He said low August inflation figures meant the Central Bank no longer needed to support the ruble to reach the budgeted inflation target of 10 percent to 12 percent for this year.

The State Statistics Committee said Thursday that consumer prices fell 0.4 percent in August. They rose 8.3 percent in the first eight months of the year.

Bukleyev said the Central Bank might also be allowing the ruble to weaken as the government favored a lower ruble rate to help it fulfill its revenue plan and maintain local companies' competitiveness.

He also said uncertainty over December's parliamentary election and the continued detention of a core shareholder in oil major Yukos had prompted higher capital flight.

The ruble has been firming gradually this year in real and nominal terms on the back of high prices for oil, the country's main export. It has, however, lost about 1.5 percent this week.

"This is a lot. This is a start of a trend. The rise [of the dollar] will continue, although not at such a pace. The Central Bank is ready for this," Bukleyev said.

He said his point was underscored by the fact that the Central Bank initially offered dollars at a higher rate than usual but later withdrew from the market altogether.

He said the Central Bank had stayed out of the market so far on Thursday, but sold around $100 million to $200 million Wednesday to smooth out the exchange rate.

Trust investment bank said the ruble was likely to fall further as the Central Bank no longer needed to increase its foreign currency reserves while the government had low upcoming foreign debt payments, around $1 billion.