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Russian regulator abandons trading band limits, regular interventions

November 10, 2014, 15:01 UTC+3 MOSCOW
The Russian Central Bank has switched to a freely floating ruble two months ahead of the scheduled time
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© Sergei Savostyanov/TASS

MOSCOW, November 10. /TASS/. The Central Bank of Russia has abandoned since November 10 the ruble’s trading corridor limits and its regular interventions on the domestic foreign currency market, according to the regulator’s new exchange rate policy parameters released on Monday.

The Russian Central Bank has therefore switched to a freely floating ruble two months ahead of the scheduled time.

“From November 10, 2014, the Bank of Russia has abolished the existing exchange rate policy mechanism, abandoning the interval of permissible fluctuations for the value of the bi-currency (dollar-euro) basket and regular interventions at the boundaries of this interval and outside it,” the regulator said in a statement.

The Central Bank’s new approach to operations on the domestic foreign exchange market does not imply that the regulator fully gives up foreign currency interventions and such interventions are possible in case of the emergence of threats to financial stability, the statement said.

Central Bank Chairwoman Elvira Nabiullina said in an interview with Rossiya-24 TV Channel on Monday that the regulator had earlier limited the volume of its intra-day foreign currency interventions to $350 million.

“The Central Bank of Russia has made a decision to abandon regular foreign currency interventions, namely, the sale of $350 million per day, if the ruble exchange rate stays below the level defined by the rules,” Nabiullina said.

The Central Bank of Russia announced on October 31 and November 5 about a package decision on raising the key rate by 150 basis points, limiting foreign currency interventions to $350 million a day and holding 12-month foreign exchange repo auctions.

The Central Bank’s package decision increased volatility on the domestic foreign exchange market where market players perceived it as a transition to a freely floating rate.

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