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Dmitry Piskulov, the chairman of the Board of the National Currency Organization
The Central Bank in its monetary policy adheres to the principle of transition to a free rate of floating currency by 2015,
which implies the gradual phasing out of foreign exchange intervention on the market
and the elimination of the currency corridor by 2015.
In 2014 it will support the currency corridor and foreign exchange intervention.
However, the Central Bank has an automatic mechanism, according to which a change in the boundaries of the currency corridor,
which now amounts to 7 rubles, occurs automatically when certain limits are reached,
such as a certain amount of accumulated interventions.
It amounted to $350 million, however at $350 million the Central Bank raised the exchange rate corridor by 5 kopecks.
When the Central Bank intervened on a larger scale, decisions were taken in the depths of the Central Bank
and the Central Bank saw great demand for currency, changes in respect of the corridor were greater,
and the Central Bank pushed the limits by 15-20 kopecks and so on.
In principle, since the beginning of the year it has raised the limits 14 times.
Over the last year the Central Bank has raised the limits of the corridor about 32 times.
If you look at the development of policy since its beginning in 2009, each year,
including 2013, there have been 10-12 annual raises.
We are aware of the fact that the Central Bank often changes the boundaries of the currency corridor.
The Central Bank has thus made it clear that it does not prevent the weakening of the national currency
and raised the limits of the corridor.
At the same time, one can say that these actions, in addition to fundamental factors,
have provoked great demand for foreign currency among the population, enterprises and economic agents,
they have also provoked demand for currency among international investors, who took a short stance on the ruble,
and a long stance on the dollar or the euro, which harms the ruble.
All these developments have resulted in the accelerated depreciation of the domestic currency.
Refusal to target exchange rates, i.e. to retain a certain defined value of the exchange rate,
as well as the transition to inflation targeting and interest rate management,
because interest rates are more important for the economy than exchange rates, although exchange rates are also important here...
Macroeconomists can cross swords here.
The Central Bank will step by step try to establish a free floating exchange rate,
which is intrinsic to all developed currencies such as the dollar, the euro, the yen, the pound and so on.
At the same time, the Central Bank will not maintain any particular threshold, it is not committed to a particular threshold,
it will not tell the market that a level of 33.50 or 35 is the desired threshold. Let the market decide it for itself.
But this has to happen in 2015, currently we are in 2014 and control mechanisms and interventions to influence exchange rates
still exist, but their importance is declining.
Even after 2015 the Central Bank will not abandon the ruble.
That is, probably, we can expect the elimination of the currency corridor in 2015,
the elimination of currency restrictions in the form of daily restrictions on foreign currency accumulation,
but the Central Bank will reserve the right, if necessary,
to intervene in foreign currency affairs to the extent that it deems necessary.
In fact, the floating regime does not imply their elimination.
When you look at the experience of Western countries,
you see that in the 70s, 80s and even 90s central banks intensively intervened in the foreign exchange markets
to support certain exchange rates or adjust some very pronounced changes
when the dollar strengthened or, on the contrary, fell.
However, in the 2000s, they almost stopped doing it and shifted towards credit-monetary policy,
that is towards controlling interest rates.
But at the same time, if for example we suddenly notice that some tendencies in the U.S. or EU economies
are leading to sharp changes in the exchange rate of the euro against the dollar,
we cannot exclude the possibility that the central banks of these countries might intervene to defend currencies.
The Central Bank, Elvira Nabibulina in fact, talked about the very fact that after the elimination of mechanisms
behind exchange rate corrections, the CB reserves the right to intervene if necessary.
It is a rather optimistic statement, we like it, because it means that the government will not leave the ruble in the lurch
and will not allow it to devalue as much as a dollar costing 70 to 100 rubles.