According to the report by the Central Bank of Russia (CBR), in January it increased net sales of USD 2.2 -fold m/m to USD 7.82bn and net sales of EUR 1.8 -fold m/m to EUR 0.59bn . At the same time in January the CBR expanded the benchmark RUB bi-currency basket ( USD 0.55 and EUR 0.45 ) price corridor daily (24 times) by 5 kopek, widening the corridor by RUB 1.2 . To compare, in all of 2013 the corridor was expanded by RUB 1.4 . Expanding the corridor minimizes the interventions on the currency market required of the CBR and is in line with the current policy of free-floating national currency by 2015. The CBR sold USD 25.2bn and EUR 2.2bn on the currency markets in 2013. This made almost 5-fold increase as compared to 2012. In Q1/13 the CBR was buying Fx, but the weakening of RUB in May led to sales of FX in currency interventions. Sales of USD peaked in July and August when USD 4.18bn and USD 5.46bn were sold. Fitch estimated in January 2014 that since April 2013 the CBR has spent USD 28.6bn on supporting the RUB rate. The agency believed that higher flexibility of the national currency would help absorb external shocks. Last week head of the CBR Elvira Nabiullina confirmed to the press that plans to free-float RUB by 2015 and fully switch to inflation targeting are not going to be revised. She clarified that currency interventions will be maintained should there be financial stability risks from RUB exchange rate fluctuations. However, the policy of curbing the interventions will be maintained throughout 2014. In January, RUB followed the trend of the emerging currencies and weakened by about 8% to USD and EUR. At the same time, the CBR has been widening the benchmark exchange rate corridor daily in order to decrease the amount of required interventions. Deputy head of CBR Xenia Yudaeva previously said that RUB can be devalued by 25%-30% without noticeable hard to the economy.
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