MOSCOW, Jan 28 (Reuters) - Russia could delay plans to move to a floating rouble and instead consider limits on the exchange rate, Economy Minister Alexei Ulyukayev said on Tuesday after a sharp sell-off in the currency in recent weeks.
“Under the current conditions, there are other possible approaches to the concept of a floating rouble and to the pace of their implementation,” Ulyukayev told journalists at a briefing.
“Ï would have discussed the possibility of introducing certain limits on the degree of freedom of the exchange rate depending on several factors related to financial stability.”
Russia’s central bank has announced plans to cease targeted interventions on the currency market and shift to a free float of the rouble by 2015, allowing the currency to absorb the shocks of the country’s weakening economy.
“Ï might have discussed timing and maybe moving it,” Ulyukayev said.
The central bank’s plan to target inflation rather than the exchange rate has been seen as potentially helping the economy, but it has also exacerbated a weakening in the rouble.
Worries about China’s economy and expectations of the United States easing its monetary stimulus have pushed the rouble to all-time lows against the euro and 4.5 percent down versus the dollar amid a rout in emerging markets, although the currency broke its fall on Tuesday.
Ulyukayev said he sees inflation in 2014 below 5 percent. The annual increase in consumer prices stood at 6.5 percent in December, above the bank’s 5-6 percent target range for this year.
“The risk for economic growth is more salient and acute than the risk of inflation ... Formally there is no stagflation. There is a risk (of it) but I believe that we have a pretty clear perspective on inflation. It will decrease and the risk to growth is much greater.”
Ulyukayev also said that state companies should pay only 25 percent of their profits in dividends, rather than a 35 percent figure proposed by the Finance Ministry under International Financial Reporting Standards (IFRS).
In the long-running debate, Russia has been considering whether to make state companies pay higher dividends to replenish government coffers and reassure foreign investors worried by a slowing economy.
The government told state companies in November 2012 that they must pay at least 25 percent of their income in dividends, an increase from 15 percent. A later proposal pushed it to 35 percent.
“We do not think it relevant for state companies to raise dividends to 35 percent in the medium term. We are no longer discussing 35 percent, 25 percent IFRS is reasonable,” Ulyukayev said. He said it was important to have a clear dividend policy and move gradually to 25 percent.