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. Last Updated: 07/27/2016

Ruble Sets Fresh Highs, Slowed by Central Bank

The Central Bank allowed the ruble to scale fresh highs versus a dollar-euro basket on Wednesday and pledged to move towards a more flexible exchange rate.

The ruble has firmed 9 percent versus the basket since September to 35.03, its strongest since January.

The Central Bank has intervened regularly in the currency market in recent weeks, but only to slow down the appreciation rather than stop it.

The relatively limited scale of interventions chimes with its aim of moving to a free-float and inflation targeting by 2012.

"The ruble exchange rate will be more flexible but, on the whole, it will remain stable. There will not be sharp fluctuations in its level," Central Bank chairman Sergei Ignatyev said, reiterating earlier comments from officials.

"The strengthening of the ruble in the past two and a half months is happening under the influence of high oil prices and renewed capital inflow into Russia," he told the parliament.

Russia saw a net capital outflow of $53 billion in the first 10 months of 2009, Ignatyev said. Based on previously reported data, that implies capital inflows of more than $9 billion in October, in line with previous estimates.

For the year as a whole, the Central Bank expects a net outflow of $40 billion, which would mean that inflows need to continue in coming weeks to balance out the capital flight seen earlier.

Ignatyev said the Central Bank had bought $6 billion in currency market interventions between Nov. 1 and Nov. 17, after purchases of more than $15 billion last month.

Dealers estimated that the regulator bought a further $700 million on Wednesday before shifting its intervention bid by 5 kopeks to 35.00.

The ruble's latest gains come as the price of key export oil moves back towards recent one-year highs.

The currency gains have helped tame Russia's inflation and Ignatyev reiterated that next year's inflation could come in under the Central Bank's forecast of 9 percent to 10 percent.