- Russia wants to weaken the ruble by buying ‘friendly’ currencies to influence the exchange rate.
- The ruble performed strongly after it collapsed in response to the Russian invasion of Ukraine.
- Russian Finance Minister Anton Siluanov said the central bank would take action by changing fiscal rules.
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Russia is weighing the ruble’s weakening by buying “friendly” currencies to influence the exchange rate, Reuters reported first.
Moscow’s finance minister Anton Siulanov told a conference on Wednesday that the weakening of the Russian national currency can be achieved “through cross rates with the dollar and the euro”. The ruble has risen to its seven-year high, thanks largely to Russia’s central bank action to curb currency outflows and sharply raise interest rates following the invasion of Ukraine.
The ruble fell in the immediate aftermath as the Kremlin expected harsh sanctions from the west, but recovered to become one of the world’s best-performing currencies.
But the ruble may now be too strong compared to the dollar and the euro, and Russia is now making less money from those currencies given the stronger exchange rate. Siulanov said the Kremlin is willing to increase its foreign exchange reserves to bring the ruble back down, and also said the central bank agreed to such a move.
Siluanov did not indicate at the conference how the plan would work, while the ruble weakened after the comments. Elvira Nabiullina, head of the Russian central bank, told the same conference that she and the RCB were willing to participate.
After the invasion of Ukraine on February 24, Russia tried to rule in the country’s money to protect the ruble from outside shocks. The central bank has since cut interest rates to 11% from a 20% high.