Press Service

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

Press Service

12 Neglinnaya Street, Moscow, 107016 Russia;

With regard to rather frequently asked questions the Bank of Russia communicates the details of its operations in the FX market.

Bank of Russia operations in the FX market are conducted in line with the mechanism, the detailed information on which you may find in the theme section of the Bank of Russia’s website. The mechanism is based on the seven-rouble wide operational band. When the value of the dual-currency basket is within this band, the Bank of Russia sells (buys) foreign currency in set volumes. Within the ‘neutral’ range of the operational band the Bank of Russia does not perform interventions. Within the adjacent ranges the volume of interventions is set at $200 million a day, while within the ranges close to the operational band borders it is set at $400 million a day.

The seven-rouble band borders change automatically according to the following rule: when the amount of Bank of Russia sales (purchases) of foreign currency equals $350 million, the band borders shift by five kopecks up (down). New borders become effective immediately. The rule envisages a possibility of repeated adjusting of borders within a day. Since the beginning of 2014 till 29 January, the borders shifted 18 times, i.e. by 90 kopecks in total.

In case the exchange rate reaches the upper border of the operational band, the Bank of Russia performs interventions without quantitative limitations until the value of the dual-currency basket returns to the operational band or the borders shift automatically according to the applicable rule, so that the value of the dual-currency basket is within the new borders of the operational band. That is why when the value of the dual-currency basket reaches the operational band border, the volume of interventions may exceed $400 million. Thus, on 27 January, the volume of foreign currency sales amounted to $1.14 billion and on 28 January it came back to $0.40 billion.

The Bank of Russia publishes daily information about the parameters of its operations in the FX market, their volume and the dynamics of operational band borders in the section “Statistics”.

The Bank of Russia changes the parameters of conducting operations in the FX market following the policy of increasing the flexibility of the national currency exchange rate. Each decision is accompanied by a press-release. There was one change from the start of 2014. On 13 January 2014, the Bank of Russia lowered the amount of target interventions to zero. This amount was not taken into account when calculating the total amount of operations for shifting the operational band borders. At the same time, the set volumes of interventions aimed at smoothing the exchange rate fluctuations remained unchanged.

30 January 2014

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