Russia Spent $11Bln on Propping Ruble Amid Conflict Fears
2014-03-06 10:20:16
Russia’s central bank said Wednesday it burnt through a record $11.3 billion during interventions earlier this week on currency markets as the ruble plummeted amid fears of conflict breaking out in Ukraine.
When markets opened Monday, the ruble nosedived to historic lows. The central bank took the extreme step of raising interest rates as it spent more and more of its foreign currency reserves.
The precipitous drop followed a decision by Russia’s parliament Saturday to approve military intervention in Ukraine, ostensibly for peace-keeping operations.
The size of the central bank’s intervention on Monday was four times larger than the previous record set in September 2011, news website Lenta.ru reported.
The regulator sets a target trading band for the Russian currency and is mandated to buy or sell foreign currency in order to keep the ruble within that trading band.
Central bank officials have said that they are aiming to move towards a fully free floating ruble in 2015. The ruble has lost almost 10 percent against the euro-dollar basket since the start of this year.