22 December 2017
EM Currency Handbook 2018: Still Fuel in the Tank
Russia
Russia formally abandoned the ruble trading corridor USD/RUB P. EUR/RUB exchange rates
on 10-Nov-14 and switched to a managed floating 1000 900
exchange rate regime. The CBR formally targets a 900 • $00
reduction of CPI to 4% by 2017 and to maintain that 800 • 100
target in the medium run. 100
600
600
SO4
The CBR declares their intention to allow fundamentals SOD
400
to set the exchange rate and they claim to have no 400
300
fixed constraints or targets for the level of the ruble. 100
200 100
However, they reserve the right to intervene to prevent
100 100
financial instability. In 2015 they purchased just over
00 • - 00
$10bn during May-July as USD/RUB rebounded from
50 to 60 according to data available on the CBR 4? 4 40. •es's 44. 40 4'
website (http://www.cbr.ru/eng/hd_base/?Prtld=valint). u11/940 m. 11$00010
—
San 0.40664 Sark Abornimvp Anne* 40
Monetary policy decisions are taken by the CBR board
of directors, consisting of twelve directors and
USD/RUB and RUB 3M implied yield
Governor Elvira Nabiullina. The members of the board
105 62A
will meet at least eight times in 2016, typically issuing
a statement every 6th or 7th Friday at 13:30 Moscow 100 614
time. These statements announce the key rate. In the 9.s
600
past the refinancing rate was also set at these 90
590
meetings, but as of 11-Dec-15, it will be equated with 09
S4 0
the key rate, and independent refinancing rate values BA
• Sl 0
will not be set. In their words, interest rates are set "on 7-,
the economic outlook and assessment of risks to 70
0
achieve the inflation target over the mid-term horizon, 6.s 0
and also on possible threats to sustainable economic 60 310
growth and financial stability." <I tit CI 1.% 10
664. 62 1 1 # 1 1
The ruble is fully deliverable and convertible. Prior to —v19/Rue Im npled v940. On ---1000943
the 1998 crisis, NDFs were actively traded both Snot Oant* Int
onshore and offshore but the NDF market is now
mostly offshore. NDFs are usually quoted outright and USD/RUB implied and historical volatility
000
in USD/RUB. An EMTA fixing rate is used as a
reference to cash-settle contracts. Interest-bearing 600
deposit accounts may also be opened, as was the case
400
before the liberalisation of the capital account (July
2006), effectively allowing for the participation of non- Xi 0
residents in the deliverable FX market. 00
•20 0
.400
2010 2011 2012 2013 2014 2013 2016 2017
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