On parameters of Bank of Russia exchange rate policy

Effective from 18 August 2014, the Bank of Russia adjusted the parameters of the exchange rate policy mechanism to further increase the rouble exchange rate flexibility.

— The permissible range of the dual-currency basket rouble values (floating operational band) was symmetrically widened from 7 to 9 roubles.

— FX intervention volumes aimed at smoothing the volatility of the rouble exchange rate was set at level equal to $0 mln. in the internal ranges of the floating operational band.

— The cumulative volume of FX interventions, which lead to the shift of the floating operational band’s borders by 5 kopecks, was decreased from $1,000 mln. to $350 mln.

The abovementioned changes are carried out as part of transition to inflation targeting regime. One of prerequisites for its successful implementation is abandoning any measures to manage the exchange rate. The Bank of Russia plans to complete the transition to a floating exchange rate regime until the end of 2014.

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 have significant impact on current rouble fluctuations.

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