|
 The moves are part of a long-term policy shift to make inflation a
more important benchmark than the exchange rate after several months
earlier in the year when the bank was forced to defend the rouble,
which came under pressure due to the crisis in neighboring Ukraine.
As part of the plan, the ruble's trading corridor will be abolished
altogether from January next year and regular daily interventions
will cease, although the bank will reserve the right to make
discretionary interventions in the interests of financial stability.
The bank said in a statement that starting from Monday it had
widened its exchange-rate corridor by 2 rubles to 9 rubles and
reduced the intervention threshold for moving the corridor against a
dollar-euro basket to $350 million from $1 billion.
It also said it would stop carrying out interventions within the
corridor to reduce exchange rate volatility.
"The stated changes have been made within the framework of moving to
an inflation-targeting regime, one of the essential conditions for
the successful realization of which is stopping managing the
exchange rate," the bank said, reiterating that it aims to move to a
free float by next year.
The central bank moves would normally be bearish for the rouble, as
the bank will be less active in currency markets to guide the
ruble's exchange rate, but the Russian currency temporarily ignored
the move in early trading, supported by the approaching end-of-month
tax period.
The rouble was 0.36 percent stronger against the dollar and 0.37
percent firmer versus the euro at 0400 EST.
Alexander Morozov, chief economist for Russia and CIS at HSBC, said
Monday's policy move would likely be followed by a cancellation of
interventions to move the corridor, effectively completing the shift
to a freely floating rouble.
[to top of second column] |
"Given that the central bank has inflation at the top of its list of
priorities, this requires a tighter monetary policy so as not to
lose the trust of market participants," he said.
In March, Russia's central bank dramatically raised the size of its
intervention threshold, to $1.5 billion from $350 million, after the
escalating Ukraine crisis caused a massive rouble sell-off,
heightening concerns about Russia's overall financial stability.
The higher threshold paved the way for the central bank to spend
some $25 billion to defend the rouble, but in June it signaled its
policy shift was back on track by reducing the size of interventions
to curb currency market fluctuations.
(Additional reporting by Katya Golubkova; Editing by Christian Lowe
and Andewq Heavens)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright
2014 Reuters. All rights reserved. This material may not be
published, broadcast, rewritten or redistributed.
 |
