MOSCOW: The Bank of Russia’s insistence it has no target for the ruble is wearing thinner by the day.
Six months after announcing a free-floating exchange rate, Russia halted this year’s biggest currency rally by buying dollars every day from May 13. As the ruble then depreciated to levels that risked accelerating inflation last week, analysts from Citigroup Inc., Rabobank and Renaissance Capital said the bank would halt its purchases. On Friday, it did just that.
While Russia said Wednesday it bought $150 million two days ago as it aims to build foreign-currency reserves to $500 billion in the coming years, the timing of intervention in the past month suggests it’s also managing the ruble within a range of about 50 to 60 against the dollar, according to Rabobank’s Piotr Matys. The program helps Russia maximize export revenue as sanctions and lower oil prices drag the economy into recession.
“Current central bank actions don’t really correspond to the ruble’s free float,” Yury Tulinov, head of research at PAO Rosbank, the Russian unit of Societe General SA, said by e-mail on Tuesday. “The pause in interventions when the ruble crossed 55 against the dollar was definitely expected by the market.”
