Central Bank increases the flexibility of exchange rate policy

The information on reduction of the maximum amount of accumulated monetary interventions, which were leading to the changes in the operating range demonstrates further increase of the Central Bank of Russia flexibility in exchange rate policy. In general, the Bank of Russia actions demonstrate a gradual abandoning the exchange rate regulation in the framework of transition to inflation targeting.

Over the period of instability in the foreign exchange market in autumn 2011, as well as in spring 2012, the Bank of Russia was demonstrating its willingness to minimize intervention in the foreign exchange market, allowing significant fluctuations of the ruble nominal exchange rate. This policy reduces the amount of speculations in the foreign currency market, since it reduces the predictability of the exchange rate dynamics.

P.V. Trunin, PhD, Head of Monetary Policy Department