Ruble have gained belated freedom

Since the 10th of November 2014 the Bank of Russia has canceled the corridor of bi-currency basket and regular currency interventions, whereby it has left the ruble «free floating». Now its rate will be determined only by market laws. However, the regulator has reserved the right to enter the market without notification in case of financial stability threat.

All of this happened on the back of unprecedented ruble devaluation towards other currencies of the world: when in autumn months the rate of USD and EUR renewed historical peaks practically every day. As the result, since the beginning of the year the national currency had gone down in value in relation to USD by 46,6%, to EUR – by 31,6%.

Primarily the CB of the RF has planned to go to the floating rate in 2015, but current situation hasn’t left an alternative: today significant reserves are needed to support the corridor, which expenditures would be just senseless.

The factor of declining oil prices – the main export article of Russia - exerts pressure on the ruble, such rapidly falling in price, first of all. As far back as in July Brent crude oil was traded at the rate of 115 USD per barrel, and now it costs less than 80 USD and continues to go down. Besides that, profiteers, aiming at making money out of strongly volatile market, make their contribution to observed processes.

On the one hand, weak ruble sets off losses of the budget from short-received export earnings, on the other hand - companies, obtaining credits on foreign markets, will feel extra costs of loan servicing first-hand, which they finally will put on consumer by way of rising prices. On top of that, the production itself, purchased abroad, has become significantly expensive – all of this will lead to increase of the inflation inland and reduction of real salaries and pensions of population even in the nearest time.

That is why the proceeding to floating rate looks today as a belated decision. Positive consequences of this step will be possible to be experienced by stabilization of external environment and reduction in geopolitical tensions around Ukraine.