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Russia’s Central Bank does not consider ruble’s weakening for budget replenishment

February 11, 19:57 UTC+3 MOSCOW
On November 10, 2014, the Russian Central Bank abolished previous exchange rate policy mechanism and completed the transition to floating exchange rate
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Russian Central Bank

Russian Central Bank

© Artyom Korotayev/TASS

MOSCOW, February 11. /TASS/. Russia’s Central Bank does not consider the option of weakening the ruble’s exchange rate for budget replenishment, the regulator’s Chief Elvira Nabiullina said on Thursday.

"Sheer stupidity," she said when asked whether the Central Bank is discussing this option with the Finance Ministry. "We don’t consider changing exchange rate policy, we’ve shifted to floating exchange rate and our exchange rate policy is well-known," Nabiullina said, adding that any attempts to artificially influence the exchange rate for budget replenishment "have huge negative consequences."

Earlier Reuters news agency reported with reference to sources in the government that low exchange rate could be included deliberately for budgetary calculations in order to balance the budget at a lower oil price. The weakening of the ruble exchange rate by 1 ruble increases revenues by 35-40 bln rubles ($440.68 mln - $503.57 mln), the source said.

On November 10, 2014, the Russian Central Bank abolished previous exchange rate policy mechanism and completed the transition to floating exchange rate. The ruble began to devaluate in the second half of 2014 as the Russian currency plunged against the dollar2.2-fold in the period from June to December. In 2015, the ruble fell by 31% against the dollar and by 17% against the euro amid falling oil prices. The dollar has gone up by 8% against the ruble to 79.5 rubles, and by 12% against the euro to 90.1 rubles year-to-date.

Russia’s Central Bank opposes the idea to reduce ruble’s volatility via spending international reserves, the regulator’s Chief also said.

"We don’t support reduction of the ruble’s volatility via sale of reserves," she said, adding that the ruble will stabilize at higher levels in any case under this policy of the Central Bank.

Nabiullina said earlier that the regulator will be working proactively to prevent threats to the financial stability in advance.

According to the data provided by the Bank of Russia, the country’s international reserves totaled $371.3 bln as of January 29.

The international (gold and foreign currency) reserves of the Russian Federation are highly liquid foreign assets available with the Bank of Russia and the Russian Government. They consist of foreign currency, special drawing rights (SDR), IMF reserve position and monetary gold.

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