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. Last Updated: 07/27/2016

Ruble Value A Cause for Concern

ST. PETERSBURG -- A further appreciation of the ruble against the dollar/euro basket by one or two rubles is a cause for "concern," Central Bank Chairman Sergei Ignatyev told a news conference on Thursday.

The ruble is trading at a four-month high at 36.73 against the dollar/euro basket, well above the 41 boundary set by the Central Bank when it ended its gradual devaluation policy last January.

"If the ruble's exchange rate strengthens by another one or two rubles, we will worry about it. There will be a sense of anxiety, concern," Ignatyev said, adding that excessive appreciation carried the risk of a rebound.

A too strong ruble would also destroy the competitive advantage achieved by Russian firms after a controlled devaluation and harm Russia's chances of speedy recovery.

Ignatyev said the Central Bank might cut interest rates further in June as inflationary pressure eases, after lowering the refinancing rate to 12 percent from 13 percent since the end of April.

"It is very likely that inflation will slow further in the next months of this year, which will allow the Central Bank to further cut the refinancing rate and other rates," Ignatyev said.

Ignatyev said Russia may even see some deflation in 2009 and added that he saw the economy picking up in the second or third quarter after the worst downfall in a decade experienced in the first quarter of this year.