Effective from 5 November 2014, the Bank of Russia adjusted its approach to foreign exchange interventions
on the borders of the
floating operational band to further increase the ruble exchange rate flexibility. As the ruble value of the dual-currency basket reaches the upper/lower border of the floating operational band, the Bank of Russia will carry out foreign currency sell/buy operations with the intensity equal to $350 million per day. Hence, in case the value of the dual-currency basket stays
on or outside the borders of the operational band during the whole trading session, the volume of Bank of Russia interventions will not increase $350 million. At the same time, in case of financial stability threats, the Bank of Russia will be ready to carry out additional interventions in the domestic foreign exchange market.
Meanwhile, the automatic rule of operational band borders adjustment remains valid under which there is an automatic 5-kopeck upward/downward border shift in case the cumulative volume of Bank of Russia foreign currency buy/sell operations reaches $350 million.
The above-mentioned adjustments will increase significantly the ruble exchange rate flexibility and at the same time will drive for a supply and demand balance in the foreign exchange market. Besides, the abandonment of unlimited foreign exchange interventions in the borders of the operational band will hamper prerequisites for speculative strategies against the ruble.
As a result of the implementation of this decision, the ruble exchange rate will be determined predominantly by the market factors.