MOSCOW: The rouble fell sharply against the dollar in early trade on Wednesday, hitting a new all-time low, after the central bank altered its exchange rate policy to scale back its defence of the Russian currency.
At 0750 GMT, the rouble was down 1.86 percent at 44.41 against the dollar and lost 2.05 percent to trade at 55.61 versus the euro.
That left the currency down 1.94 percent at 49.45 against a dollar-euro basket.
Russia's central bank said it would limit the size of its daily interventions to support the currency to $350 million, compared to the unlimited amount it was able to spend previously.
The bank's announcement that it would launch a new 12-month forex repo instrument designed to ease a shortage of dollar liquidity did little to immediately stabilise the rouble.
"The central bank of Russia has finally done it - the rouble has de facto become a fully flexible currency after the recent changes in FX policy parameters," Dmitry Polevoy, chief Russia economist at ING Bank in Moscow, said in a note.
The bank has spent around $70 billion this year propping up the rouble.
The bank had said it planned to float the currency before the end of the year as part of a shift to an inflation-targeting regime.
Those plans have been complicated by a collapse in the currency, which has fallen over 20 percent against the dollar this year because of falling oil prices, risk aversion towards Russia over the Ukraine crisis and demand for foreign currency from firms shut out of international capital markets.
Brent crude oil prices were down around 1 percent on Wednesday, stretching losses into a fifth session. Oil is one of Russia's main exports, and sales of oil and gas account for up to half of federal budget revenues.
Comments
Comments are closed for this article.