Barring shocks, rouble may firm, central bank chief quoted as saying

MOSCOW, April 26 Sat Apr 26, 2014 6:26am EDT

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MOSCOW, April 26 (Reuters) - Russia's central bank chief said on Saturday that, barring external shocks, the rouble exchange rate should be stable and could even strengthen, a Russian news agency reported.

"If there are no additional external shocks, we think the rouble exchange rate will be quite stable and may even begin to strengthen," RIA news agency quoted Governor Elvira Nabiullina as telling REN TV.

She said that as long as fluctuations in the rouble did not threaten financial stability, the central bank would leave it to the market to set the rate.

"But if threats to financial stability arise, of course (the central bank) will get involved," Nabiullina was quoted as saying in the eastern city of Khabarovsk.

The central bank surprised markets on Friday by raising its key interest rate by 50 basis points to 7.5 percent because of increased inflation risks fuelled by a weakening rouble.

The rouble has fallen some 9 percent against the dollar this year, with the fall exacerbated by investors withdrawing funds from Russia over the Ukraine crisis.

It weakened 0.72 percent to 36.03 to the dollar on Friday. Hours before the central bank decision, Standard & Poor's cut Russia's credit rating and warned further cuts could follow if tougher sanctions were imposed on the country and the outflow of funds was not stemmed. (Reporting by Nigel Stephenson; Editing by Mark Potter)

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