The Central Bank of Russia (CBR) didn’t oppose the 0.2-percent appreciation of Russia’s ruble to bi-currency market yesterday, June 11, 2008.
Photo: Mikhail Pochuev
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Ruble Left Corridor
The Central Bank of Russia (CBR) didn’t oppose the 0.2-percent appreciation of Russia’s ruble to bi-currency market yesterday, June 11, 2008. As a result, the worth of that basket sank below the usual support of 29.6 ruble. CBR uses the fluctuations of ruble to improve the structure of foreign investments, while its appreciation is expected to oppose inflation.
For the first time yesterday, the exchange rate of bi-currency market (ˆ0.45+$0.55) sank below 29.6 ruble to 29.55 ruble, signaling the nominal appreciation of the ruble was roughly 0.2 percent and it finally left the 1-percen corridor of roughly 30 kopecks. The appreciation isn’t grand and speculating whether it is the appreciation or the increase in volatility and corridor extension would be too early. Regardless, the investment analysts say that the ruble revaluation has occurred in Russia.
There are a few coincidences. First, the growth in the rate of exchange happened on the same day when the CBR hiked its refinancing rate. Both moves toughen monetary policy and are regarded as the action aimed at containing inflation. Second, IMF released its macroeconomic report on Russia yesterday, and its sentiment is very critical. One of the recommendations of the IMF analysts is to oppose further appreciation of ruble. Otherwise, the overheat of economy would lead to heavy aftereffects. The third coincidence is that the U.S. dollar appreciated by more than 1.5 percent to euro yesterday.
And there is another interesting coincidence. On expectations of ruble appreciation, nonresident investors returned to the market in April, but the CBR didn’t yield to the pressure, depreciating the ruble instead of making it stronger. The inflow neared zero in May with quite a few investors withdrawing money from the interbank sector. The current symbolic appreciation allows the remaining investors to follow the example. The level of banking liquidity (931 billion ruble) in the country suffices to do without the capital inflow.
www.kommersant.com
All the Article in Russian as of June 11, 2008
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