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Putin expects Central Bank’s steps to stabilize foreign currency market

November 10, 2014, 19:45 UTC+3 BEIJING
There are no fundamental factors and causes for such imbalances in the national currency, Russian President Vladimir Putin said
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Russian President Vladimir Putin

Russian President Vladimir Putin

© Mikhail Klimentyev/TASS

BEIJING, November 10. /TASS/. Russian President Vladimir Putin said on Monday he expected the country’s Сentral Bank to stabilize the domestic foreign exchange market.

“As you probably know, our national currency has been hit by certain speculative attacks lately. I hope the Central Bank’s steps and its most recent moves announced today will normalize the situation because we are deeply convinced that there are no fundamental factors and causes for such imbalances in the national currency,” Putin said at a meeting with International Monetary Fund (IMF) Managing Director Christine Lagarde.

“And today the Central Bank has announced that the national currency is switching to a free float but the Central Bank reserves the right to carry out interventions when it deems necessary,” Putin said.

“And if the Central Bank also restrains certain liquidity provision, this will certainly punish speculators who have prepared for further speculative actions,” Putin said.

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.

Putin said he hoped the Russian Central Bank and the government would closely watch developments in the economy and interest rates, at which loans were provided to the real sector of the economy.

“As you know, we do not interfere in the Central Bank’s policy from the executive branch and the Central Bank conducts independent policy in compliance with law but we will, of course, watch closely the developments and try to implement by our joint efforts the development tasks we face,” Putin said.

The Russian president said he shared concerns over the situation in the global economy.

“We’re aware of your concerns over the state of the global economy. We share them. We believe the causes for this instability remain the same — first of all, this relates to a strong structural imbalance and a fall in business activity and investments in the real sector of the economy,” Putin told Lagarde.

“This prompts commodity market volatility and creates a sort of an endless circle — slow growth impedes debt repayment while the debt burden puts pressure on business activity,” Putin said.

Russia’s economic priorities remain the same, Putin said. “We’re trying not only to ensure growth but to give it a new quality. And we attach primary importance to maintaining sound macroeconomic policy. We have some of the G20 lowest debt indicators and quite large gold and foreign currency reserves. We continue watching the inflation level very closely and target it,” Putin said.

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