Russia’s central bank loosened currency controls by widening the ruble’s trading band for a second time this year as it focuses on targeting inflation.
Bank Rossii increased the trading corridor in which it manages the ruble against its target dollar-euro basket to 6 rubles, from 5 rubles, the Moscow-based regulator said in a statement on its website today. It also reduced the volume of currency interventions needed to move the band by 5 kopeks to $500 million from $600 million. The changes are effective today.
Chairman Sergey Ignatiev has pledged to shift the bank’s policy to target inflation within the next three years as it allows the ruble to trade more freely. Russia will hold consumer-price growth to no more than 6.3 percent this year, the lowest since the Soviet Union collapsed two decades ago, Prime Minister Vladimir Putin said last week.
“Increasing the potential flexibility of the ruble through the measures taken will help increase the effectiveness of monetary policy used by Bank Rossii to ensure price stability,” policy makers said in the statement.
The ruble weakened 0.8 percent today to 31.3800 per dollar and by the same amount to 40.9825 against the euro at the close of trading in Moscow, before the central bank’s announcement. That left the currency 0.6 percent weaker at 35.7011 against the central bank’s basket of about 55 percent dollars and 45 percent euros, the first decline in five days.
Bank Rossii targets reducing inflation to 5 percent to 6 percent next year, 4.5 percent to 5.5 percent in 2013 and 4 percent to 5 percent by 2014, according to a three-year monetary policy plan published in November.
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