Press Service

The Central Bank of the Russian Federation (Bank of Russia)

Press Service

12 Neglinnaya Street, Moscow, 107016 Russia;

On situation in foreign exchange market and FX repos

In order to stabilise the situation in the foreign exchange market, the Bank of Russia held FX interventions and decided to set from 4 December 2014 the minimum interest rates on FX repos for all terms (one-week, 28-day, and 12-month) equal to LIBOR rates in corresponding currencies and for comparable terms plus 0.5 percentage points.

According to Bank of Russia estimates, the current ruble exchange rate has deviated considerably from fundamentally reasonable values, i.e. the level determined by the impact of macroeconomic factors primarily affecting the balance of payments: export prices, interest rate differential, economic activity and other parameters. Currently observed dynamics of the ruble exchange rate, including its redundant volatility, create prerequisites for financial stability risks, and stable depreciation and inflation expectations.

The measures taken by the Bank of Russia will facilitate the return of the exchange rate to the fundamentally reasonable values. Decrease in the interest rates on operations to provide FX liquidity will enhance their effectiveness and balance supply and demand in the foreign exchange market with lower volatility of the exchange rate.

The Bank of Russia will continue to follow the situation in the foreign exchange market and analyse its impact on other segments of the financial market and the behaviour of the economic agents. If required, the Bank of Russia is determined to carry out further unlimited FX interventions without prior notice. The information on the interventions will be published in accordance with the established procedure.

On 11 December 2014, the meeting of the Bank of Russia Board of Directors will consider the key rate level and provide a detailed analysis of the economic conditions and an updated forecast.

04 December 2014

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