The Central Bank of Russia renounces an idea to let the ruble free-float

The Central Bank of Russia (CBR) diminished its involvement in national currency support, despite poor macroeconomic indicators and challenging geopolitical environment due to events in Ukraine. This complies with CBR plans on calculation of free floating rate.

Presently if ruble exchange rate deviates from the middle of bi-currency corridor on 5,1 RUR and more, instead of 3,1 RUR, the regulator will recourse to exchange market intervention. Interventions upon the rate deviation on more than 5 RUR will be carried out to the value of 200 USD, instead of 300 USD.

Besides, the CBR reduced the value of interventions, leading to change of 7-ruble corridor borders from 1,5 billion USD to 1 billion USD. Prior to March, 2014 this value amounted to 350 million USD. At that moment the significant increase was generated by the panic on the exchange market due to Crimea annexation events.

Despite economic slowdown and challenging foreign policy environment, The Bank of Russia isn’t going to renounce the idea of the ruble free-floating, which is necessary for its full conversion and transformation to regional monetary unit for Customs Union countries.

However, it isn’t worth waiting for release of pressure on ruble in the near future. Recent events in the Ukrainian skyline have further reanimated the talks among Western countries about more severe sanctions in relation to Russia, which speculators wouldn’t fail to use.