ruble breaches central bank trading band, stocks recover
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[October 06, 2014]
MOSCOW (Reuters) - Russia's ruble
hit a new all-time low versus the dollar early on Monday and breached
the central bank's trading band, implying the bank intervened once more
to defend the currency.
The ruble touched a new low of 40.05 against the greenback, the
first time it has breached the 40 level, and hit a low of 44.59
against a dollar-euro basket the central bank uses to gauge the
ruble's exchange rate.
The bank said on Monday it had shifted its target exchange-rate
corridor for the ruble by 10 kopecks, to 35.50 to 44.50 rubles
against the basket, following market interventions to curb the pace
of the currency's decline on Friday.
The Russian currency has been under heavy selling pressure due to
falling oil prices, sanctions imposed over Moscow's role in the
Ukraine crisis and strong demand for dollars from local firms shut
out of international capital markets.
By 3.30 a.m. EDT, the ruble had recovered slightly to trade 0.06
percent stronger at 39.93 against the dollar but weakened 0.28
percent against the euro to 50.07. That left it 0.12 percent weaker
against the basket at the 44.50 level which marks the top of the
central bank's trading band.
Maxim Korovin, a forex analyst at VTB Capital bank, said in a note
that the level of 40 rubles per dollar "might ignite FX concerns
Under its managed float, the central bank moves the boundaries of
the ruble's trading corridor by five kopecks every time it spends
The central bank, which still aims to let the ruble float freely as
of next year, last shifted the trading band on May 2, but on Aug. 18
it expanded the corridor by two rubles to nine rubles.
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Alfa Bank said in a note: "We reiterate that an ahead-of-schedule
rate hike would be a positive sign for the market, while failure to
do so would indicate that the CBR could be facing obstacles to
transitioning to ruble free-float."
Russian shares were broadly firmer on Monday, supported by
recovering risk appetite on global stock markets.
At 3.30 a.m. EDT, the dollar-denominated RTS index was up 1.3
percent to 1,106 points, while its ruble-based peer MICEX traded 1.3
percent higher at 1,402 points.
Among Russia's blue chips, top bank Sberbank was 1.2 percent higher
and state gas company Gazprom was up 1.6 percent.
(Reporting by Alexander Winning and Vladimir Abramov; Editing by
Jason Bush and Catherine Evans)
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