On the Parameters of the Bank of Russia exchange rate policy
Effective from 22 May 2014, the Bank of Russia adjusted the parameters of the exchange rate policy mechanism to further increase exchange rate flexibility of the rouble in context of the transition to inflation targeting.
Amid lower volatility observed on the domestic foreign exchange market, the Bank of Russia decreased FX intervention volumes in the internal ranges of the floating operational band by $100 million to smooth the volatility of the rouble exchange rate. Other parameters of the mechanism of the Bank of Russia exchange-rate policy were not changed. Specifically, the cumulative volume of FX interventions, which lead to the shift of the operational band’s boundaries by 5 kopecks, was retained at the level of $1,500 mln.
Taking into account that the current value of the dual currency basket is in the neutral range of the floating operational band (in which there is no FX intervention to smooth the volatility of the rouble exchange rate), this decision will not impact rouble fluctuations.
| as of 21 May 2014 | as of 22 May 2014 | |
| Dual currency basket position in the operational band | Volume of interventions aimed at smoothing rouble exchange-rate fluctuations*, millions of US dollars | |
| upper sales range | −400 | −300 |
| sales range | −200 | −100 |
| "technical" range | 0 | 0 |
| "neutral" range | 0 | 0 |
| purchases range | 200 | 100 |
| lower purchases range | 400 | 300 |
* "+" means foreign currency purchase, "−" means foreign currency sale.
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