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. Last Updated: 07/27/2016

Passive Role Adopted On Ruble

The Central Bank does not plan to strengthen the ruble in order to curb price growth, as such a measure could also stoke inflation, a top central banker said on television Thursday.

The Central Bank has strengthened the ruble in small moves against a dollar and euro basket in order to make imported goods cheaper, but a stronger ruble sucks in foreign capital as investors bet on its future appreciation.

"We currently regard inflationary and anti-inflationary effects of this measure as almost equal," said the Central Bank's deputy head, Konstantin Korishchenko. "Therefore this measure is not at the forefront of fighting inflation."

Korishchenko said Russia had seen $60 billion in net private capital inflows so far this year. An appreciating ruble is a bonus for foreign investors, who closely watch inflation data, trying to guess the Central Bank's next move.

The ruble is up 1.8 percent so far this year against the basket, made up of 55 cents and 45 euro cents. The Central Bank last intervened on the forex market to push the ruble higher in August.

Russia is on track to miss its 2007 annual inflation target by a wide margin after inflationary pressure from excessive public spending earlier this year was compounded by global food price rises.

Korishchenko said Russia should not respond with exchange rate measures to external pressures, such as global food price rises, because this might result in higher volatility and exchange rate risks.

"People will try to hedge against these exchange rate fluctuations and therefore hike prices, stoking inflation," Korishchenko said.