Putin hopes Central Bank and government find balance in ruble exchange rate dynamics

MOSCOW, January 22. /ITAR-TASS/. Russian President Vladimir Putin on Wednesday expressed hope the country’s economic authorities would find a reasonable balance on the ruble exchange rate.

“There should always be a sound balance,” Putin said, answering students' questions on a visit to Moscow’s MIFI National Nuclear Research University.

“Until now, the Central Bank and the government of the Russian Federation, the economic bloc, have managed to find and maintain this balance through the use of budget instruments,” the Russian president said. “I hope it will be like that in the future as well.”

Putin specified that regarding the national currency exchange rate, the Central Bank only regulated it when it went beyond the upper and lower limits of the floating exchange rate.

“The freer the Russian national currency is, the better, ultimately", he said, adding that this would make the economy react more effectively and timely to processes taking place in it.

Russia’s Central Bank on Tuesday moved 5 kopecks up the limits of the floating exchange rate band of the bi-currency basket (which consists of $0.55 and €0.45), according to bank data. Currently, the exchange rate band limits are defined within the interval of 33.35-40.35 rubles.

The cost of the bi-currency basket on the Moscow Exchange on Monday, January 20, rose 8 kopecks to 39.01 rubles for the first time since July 2009.

The Central Bank uses the bi-currency basket to soften the consequences of sharp fluctuations of exchange rates. When the volume of the bank’s accumulated interventions on one of the band’s boundaries reaches $350 million, the boundaries are automatically shifted 5 kopecks.

Putin also told MIFI students that the Central Bank’s activity to rehabilitate the banking sector was firstly connected to the interests of investors so they were not left with nothing.

The Russian president said the Central Bank should “in due time react to problems of financial institutions and make timely and relevant decisions.”

“It is not connected with some mythical interests of the financial sphere, or the Russian Federation’s economy, but it is first of all connected with the interests of investors,” he said.

Putin’s words came some two months after the Central Bank revoked the license of Master Bank, which was among the country's 100 large banks, in November, citing Master Bank's suspicious large-scale operations and failure to abide by federal laws on banking and combating money laundering and terrorism.

MIFI (Moscow Engineering and Physics Institute) was one of the first institutions of higher learning to be granted the status of a national research university several years ago.

MIFI conducts fundamental research. It has established close contacts with the state nuclear corporation Rosatom in training of specialists for the nuclear power sector and maintains permanent contacts with foremost foreign institutes.