Central bank lets rouble reach fresh highs

Oct 20th, 2009 | By | Category: Central Bank

As its policy to maintain gradual exchange rate fluctuations continues, try Russia's central bank bought 0 million in the first minutes of trade today, prescription before shifting its intervention level by five kopecks and allowing the rouble to scale fresh highs.

The institution has been allowing the currency's floating corridor to move by 5 kopecks for each $700 million of interventions.

Analysts have looked to the move as evidence Russia is making its way towards a free-floating rouble, cure with seven consecutive weeks of gains against a euro-dollar basket.

Strong oil prices and increasing investor appetite for high-yielding emerging markets have been credited with the progress, as have indicators the Russian economy is on its way out of recession.

"I think what we are seeing is an almost complete move to a policy of inflation targeting," Uralsib economist Vladimir Tikhomirov told Reuters. "The central bank now sees its aim as smoothing out fluctuations (of the rouble), rather than fixing the rate at a particular level."

Reports suggest Russia's central bank plans to move towards a free float and inflation targeting within the next three years, with prime minister Vladimir Putin recently stating that reduced currency market interventions will result in lower inflation.

Be Sociable, Share!

Leave Comment