On Wednesday, the Central Bank of Russia announced that it plans to step up support for the ruble, which has weakened extensively after 18 months of Western sanctions following the Russian attack on Ukraine last year in February.
Between September 14 and 22, the bank would sell each day 21.4 billion rubles ($218.5 million) of foreign currency on the market, about 10 times the recent volume it is selling every day, the Russian bank said.
The central bank linked the action to an approaching payment of foreign currency bonds issued by the government, known as Eurobonds.
The Bank of Russia said that holders of Eurobonds will be paid by the Finance Ministry in rubles by the established method, and therefore a part of these bondholders may make further need for foreign currency.
The Russian government formed the payment of these bonds in rubles rather than the foreign currency they are formally denominated in following the imposition of Western sanctions.
The further volume by the central bank will support the response to the potential further need for foreign currency and lower volatility in the market during this term.
While the value of the ruble retrieved after a drop after the beginning of Russia’s invasion of Ukraine thanks to steps carried by the authorities, it has been sliding for the past year.
It dropped hurriedly at the beginning of August, shattering the 100 rubles to the dollar level for the first time since in the immediate path of the start of the military campaign.
To stabilize the ruble and hold increasing inflation the Bank of Russia hiked its key interest rate from 8.5 to 12 percent. That enabled bolster the ruble to under 94 to the dollar, but it has slowly eroded to 98 to the dollar currently.
