(Adds detail, comments)
By Oksana Kobzeva and Alexander Winning
MOSCOW Aug 18 Russia's central bank on Monday
moved a step closer to its goal of a freely floating rouble
exchange rate by widening its trading corridor for the rouble
and reducing the interventions it carries out to move the
The moves are part of a long-term policy shift to make
inflation a more important benchmark than the exchange rate
after several months earlier in the year when the bank was
forced to defend the rouble, which came under pressure due to
the crisis in neighbouring Ukraine.
As part of the plan, the rouble's trading corridor will be
abolished altogether from January next year and regular daily
interventions will cease, although the bank will reserve the
right to make discretionary interventions in the interests of
The bank said in a statement that starting from Monday it
had widened its exchange-rate corridor by 2 roubles to 9 roubles
and reduced the intervention threshold for moving the corridor
against a dollar-euro basket to $350 million from $1 billion.
It also said it would stop carrying out interventions within
the corridor to reduce exchange rate volatility.
"The stated changes have been made within the framework of
moving to an inflation-targeting regime, one of the essential
conditions for the successful realisation of which is stopping
managing the exchange rate," the bank said, reiterating that it
aims to move to a free float by next year.
The central bank moves would normally be bearish for the
rouble, as the bank will be less active in currency markets to
guide the rouble's exchange rate, but the Russian currency
temporarily ignored the move in early trading, supported by the
approaching end-of-month tax period.
The rouble was 0.36 percent stronger against the dollar
and 0.37 percent firmer versus the euro at 0800
Alexander Morozov, chief economist for Russia and CIS at
HSBC, said Monday's policy move would likely be followed by a
cancellation of interventions to move the corridor, effectively
completing the shift to a freely floating rouble.
"Given that the central bank has inflation at the top of its
list of priorities, this requires a tighter monetary policy so
as not to lose the trust of market participants," he said.
In March, Russia's central bank dramatically raised the size
of its intervention threshold, to $1.5 billion from $350
million, after the escalating Ukraine crisis caused a massive
rouble sell-off, heightening concerns about Russia's overall
The higher threshold paved the way for the central bank to
spend some $25 billion to defend the rouble, but in June it
signalled its policy shift was back on track by reducing the
size of interventions to curb currency market fluctuations.
(Additional reporting by Katya Golubkova; Editing by Christian
Lowe and Andewq Heavens)