Russian Central Bank Widens Ruble Band, Maintains Interventions
Published: April 14, 2014 (Issue # 1805)
The Bank of Russia has announced it will keep the volume of accumulated interventions at $1.5 billion, while shifting the ruble trading corridor by 5 kopecks, according to the bank's website.
The Central Bank uses a euro-dollar basket as an operational benchmark for its exchange rate policy. Its range of permissible values are given in a floating corridor, with limits automatically adjusted when a certain volume of accumulated interventions is reached.
Under the conditions of domestic market volatility caused by the tensions around Ukraine, the Central Bank shifted to a daily determination of exchange rate policy.
Earlier this week, a senior official at the World Bank said the Russian central bank had made the right decision to keep interventions high in the short term to prevent excessive volatility in the exchange rate.
"That was not a bad strategy to try to overcome that period instead of creating a lot of volatility in the currency," said Hans Timmer, the chief economist of the World Bank Europe and Central Asia.
Starting March 3, accumulated interventions increased to $1.5 billion from $350 million as of the end of February, with other parameters remaining unchanged.