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. Last Updated: 07/27/2016

Central Bank Hikes Ruble Rate

The Central Bank allowed the ruble to rise by 0.3 percent against a dollar/euro basket in a surprise move on Monday as oil pushed towards record highs signaling a renewed upward pressure on the ruble.

Monday's hike is the first since Russia lifted restrictions on capital currency movements on July 1, paving the way for full ruble convertibility but also exposing it to speculative currency inflows.

"It was very unexpected, the Central Bank had earlier said it was not going to let the ruble rise for the time being but this morning they abandoned their bidding level," said a currency dealer at a Moscow subsidiary of a large Western bank.

The ruble stood at 27.76 to the basket Monday morning, bringing total gains so far this year to 3.97 percent.

The Central Bank last upped the ruble by 0.5 percent in early June after it having held the rate steady since late March, but then said on June 6 it saw no need for the currency to rise further in the near-term.

But Deputy Chairman Alexei Ulyukayev said the bank was reserving the right "to act according to circumstances".

The Central Bank runs a managed float of the ruble by targeting a currency basket -- comprising 60 U.S. cents and 40 euro cents -- and can up its intervention limits, allowing the Russian currency to rise.

The bank prints rubles to buy petrodollars flowing into Russia at a record rate as international prices for oil climb close to $78 per barrel. Russia's gold and foreign exchange reserves, as well as the budget stabilization fund, swell as a result.