The Bank of Russia moved again Tuesday to shore up the ruble, spending as much as $1.75 billion over the last three trading days in the heaviest interventions since mid-March.
The ruble has been hitting fresh lows almost daily since the beginning of October. Sliding oil prices have hit Russia’s economy hard, given the country’s dependence on energy exports. At the same time, sanctions imposed by Western countries over the Ukraine crisis have limited the ability of Russian banks and companies to borrow abroad.
On Tuesday, the ruble weakened to a record 44.65 against a basket of euros and dollars that the central bank uses as its key gauge of the currency market. The fact that the currency has weakened to that point indicates that the Bank of Russia, the nation’s central bank, has again changed the band within which it allows the ruble to move.
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The permitted range is now likely to be from 35.65 to 44.65, compared with 35.50-44.50 on Friday; the central bank will reveal the new corridor early on Wednesday.
Whenever the ruble moves to the weak end of the trading band, the central bank begins selling dollars and euros to cushion the currency’s decline. It automatically moves the band by 5 kopecks, or hundredths of a ruble, once an intervention allotment of $350 million is exhausted.
Since the beginning of October, the bank has shifted the ruble’s trading band five times.
In March, following Moscow’s signal that it was ready to annex Ukraine’s region of Crimea, the central bank had to stem a selloff in the ruble with $22.3 billion from its reserves of gold and foreign exchange. In late September, the reserves were still the world’s fourth-largest, at $457 billion.Read the rest of the story HERE.
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