Russia’s Central Bank has spent $200 million a day on the domestic foreign exchange market in the last three business days to defend the national currency amid eurozone debt woes and falling oil prices, Central Bank Chairman Sergei Ignatyev said on Wednesday.
“Throughout May, the value of the bi-currency basket moved from the corridor boundary where the Central Bank purchased foreign currency to the boundary where the Central Bank sells foreign currency,” Ignatyev said. “In the past three business days, the Central Bank sold about $200 million a day. Further ruble dynamics will depend on oil price changes.”
The ruble has been in freefall since early May due to increased investor concern about the eurozone sovereign debt crisis and weak macroeconomic data from the U.S. and China indicating further slowing of the global economy. That has in turn caused the price of oil – Russia’s largest export – to fall.
Ignatyev said oil prices had fallen by $20 per barrel or by 17 percent in May, while the value of the dollar/euro bi-currency basket increased by 10 percent.
The ruble’s slide accelerated last week as international oil prices plunged below $100 per barrel, pushing the ruble past 34 rubles to the dollar.
Russia’s central bank stayed away from active intervention in the domestic foreign exchange market during most of last week, letting the ruble value of the bi-currency basket move to the upper boundary of the 32.15-38.15 ruble range set by the regulator and started to intervene more actively only from Friday.
With the central bank selling foreign currency in the domestic forex market, the ruble continued to strengthen against the dollar on the MICEX-RTS forex market. As of 10:36 a.m. Moscow time (06:36 a.m. GMT), the ruble gained 16 kopecks to rise to 32.84 to the dollar and grew by 13 kopecks to 41.00 against the euro.