Russia enhances ruble's flexibility

Russian Central Bank (CBR) on Wednesday announced its decision to expand the floating corridor of ruble against a currency basket from 3 rubles to 4 rubles.

"With today's rate fixing a more flexible regime will be taken . .. We have expanded the boundaries of a floating operating corridor from 3 to 4 rubles," said CBR deputy chairman Alexei Ulyukayev, adding that the corridor was widened symmetrically at 50 kopecks at both ends.

The CBR set Wednesday's exchange rate of ruble against the currency basket, which was made up of 55 percent of U.S. dollar and 45 percent of euro, at 35.49 to 1.

The maximum amount of foreign exchange intervention by the CBR on the boundaries of the corridor was also lowered from 700 million dollars to 650 million dollars, said Ulyukayev.

Earlier an agent from a major Russian bank said now the floating corridor stood between 32.9 and 36.9 rubles.

In order to maintain currency stability, the CBR set a floating corridor for ruble against a currency basket. Once the exchange rate of ruble approached the upper or the lower limits of the corridor, the CBR would correspondingly sell or buy foreign exchanges.

The last time for CBR to adjust the floating corridor was on July 10, 2009, when it enlarged the boundaries from 2 to 3 rubles.

The bank was also scrapping the fixed currency band of 26-41 rubles, by which the ruble was allowed to trade against the currency basket.

"Decisions of the CBR will promote exchange rate flexibility and reduce the direct intervention of the CBR in the exchange rate on the domestic market," said the bank official.

Source:Xinhua