Oct. 11 (Bloomberg) -- Russia needs to stem the appreciation of the ruble and isn’t ready to implement the central bank’s plan to let the currency trade freely, Deputy Economy Minister Andrei Klepach said in an interview.
The ruble has gained 2.7 percent against the dollar this month, making it the second-best performer among 25 emerging-market currencies tracked by Bloomberg. Demand for Russian assets is rising as higher oil prices bolster the economy of the world’s biggest energy exporter.
“Our fundamentals, the state of the current account, are allowing the ruble to strengthen at a fairly strong pace,” Klepach said Oct. 9 in Washington, where he took part in the International Monetary Fund’s annual meeting. “We can’t give up on restraining the appreciation of the ruble’s rate, and that contradicts the policy of targeting inflation and refusal to affect the exchange rate in the medium term.”
Bank Rossii has pledged to shift its policy regime to target inflation by 2012 as it allows the ruble to trade more freely. The change may take “several years” as the economy isn’t ready for unrestricted currency trading, Klepach said.
Russia’s central bank, which steers the ruble exchange rate against a basket of dollars and euros to manage fluctuations in the currency, has “made serious progress in liberalizing the exchange rate,” First Deputy Chairman Alexei Ulyukayev said Oct. 5. The regulator is becoming “marginal” on the currency markets and expects the ruble to strengthen, he said.
Effective Ruble Rate
The ruble’s effective rate is set to increase 10.7 percent this year and 5.7 percent in 2011, according to the Economy Ministry. The rate measures the ruble against the currencies of Russia’s major trading partners, stripping out the effects of inflation.
Russia’s current account, the broadest measure of trade in goods and services, reached a surplus of $60.9 billion in the first nine months of 2010, compared with $33.3 billion during the same period last year, central bank data show.
Oil for November delivery advanced 99 cents to $82.66 a barrel Oct. 8 on the New York Mercantile Exchange. Futures have risen 1.3 percent since Oct. 1, the third straight weekly gain and the longest stretch of weekly advances since June. Prices have increased 13 percent in the past 12 months.
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