Central bank prepares for rising rouble strength

Oct 14th, 2009 | By | Category: Rouble News

The rouble continued its reversal of fortune this week, more about as Russia's central bank bought another $1.4 billion to keep the currency's appreciation gradual and pave the way for another strong week.

Yesterday (8th October), the rouble closed at 35.92 against the euro-dollar basket – used by the central bank as a guide for its foreign exchange policy – after finishing at 36.03 the day before.

Dealers have suggested the bank will administer further bid shifts today, with current interventions enabling the regulator to replenish its gold and foreign exchange reserves. The reserves were depleted by around $200 billion during the managed depreciation of the rouble last winter.

Alexei Borichev, from the Moscow arm of financial services firm ING, told Reuters that, without the central bank, the rouble may already have jumped to 23 roubles per dollar.

"A strong country needs a strong currency," he added.

Vladimir Osakovsky, head of research strategy at Moscow's UniCredit Bank, said the rouble is benefitting from economic optimism which has prompted investors to look towards riskier assets that tempt them with higher returns.

Analysts maintain the rouble's rally will continue as long as oil prices remain strong.

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