http://www.bloomberg.com/news/2014-08-18/russia-widens-ruble-basket-to-complete-free-float-by-end-of-year.html
Russia’s central bank widened the ruble’s trading band and reduced the amount of foreign exchange it will buy and sell as the world’s largest energy exporter moves away from managing its currency.
Policy makers increased the corridor within which the dollar-euro basket can trade to 9 rubles from 7 rubles and abandoned all interventions while the exchange rate moves within this band, according to a statement on the Bank of Russia website today. The central bank previously bought and sold $200 million per day when the ruble breached certain levels.
Russia is loosening its grip on the exchange rate even as the crisis in Ukraine spurs the fourth-biggest currency price swings in emerging markets. The changes are intended to help complete the shift to a freely floating ruble by the end of this year, which the central bank says is necessary to enable it to adopt inflation targeting and focus on interest rates rather than currency interventions. The ruble gained 0.3 percent to 41.5244 against the basket by 12:43 p.m. in Moscow.
“This is a signal for the market to look more to the interest rate than the foreign-exchange” rate to gauge central bank policy, Natalia Orlova, the chief economist at Alfa Bank in Moscow, said by phone. “The central bank decision is well-timed.”
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