Russian central bank changes rules for shifting rouble corridor

by Reuters
Monday, 3 March 2014 18:00 GMT

MOSCOW, March 3 (Reuters) - The Russian Central Bank said on Monday it had raised the interventions allotment to be exhausted before it shifts the rouble's trading corridor - to $1.5 billion from $350 million - and that it will decide daily on the currency's trading policy.

"Due to increased volatility in the domestic foreign exchange market, the Bank of Russia moves to daily determinations of the parameters of each exchange rate policy, which will be based on an assessment of the current situation," the central bank said in a statement.

"This measure was taken in order to prevent risks to financial stability by limiting exchange rate fluctuations."

The central bank keeps the rouble in a target exchange-rate corridor, which as of Friday extended from 35.40 to 42.50 roubles to the dollar-euro currency basket.

Under its managed float, the central bank increases its interventions as the rouble approaches the boundary of the corridor. Monday's decision mean that it will automatically shift the corridor only after an intervention allotment of $1.5 billion is exhausted.

The rouble fell to all-time lows on Monday against the dollar and the euro as investors sought safe havens from the risk that Russia, after seizing control of the Crimean peninsula, might go to war with Ukraine. It closed 2.2 percent down against the dollar after traders said the central bank had spent at least $10 billion to prop it up.

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