BOFIT Weekly Review 2015/01
Russia’s forex markets remain turbulent
After recovering considerable ground last week, the ruble resumed its decline this week. The ruble’s latest drop was apparently sparked by economy ministry data showing negative economic growth in November, not to mention the on-going decline in crude oil prices. Russia’s markets remain jittery, with high volatility in daily trading.
The Central Bank of Russia has refrained from large interventions in the currency markets since December 22. On December 31, the official CBR ruble exchange rates were 68.3 for the euro and 56.3 for the dollar.
To ease the situation on foreign currency markets, the government mandated on December 17 that five large state-owned export enterprises (Gazprom, Rosneft, diamond producer Alrosa, the specialised international oil venture Zarubezhneft and spirits distiller Kristall) exchange their extra foreign currency holdings for rubles. By the beginning of March 2015, the forex holdings of these companies should be reduced to their value of October 2014. These companies must also report their forex holdings on a weekly basis to the central bank. Observers note that if these firms convert their extra forex holdings into rubles, it would to some extent help in stabilising currency markets.
While the mandate does not concern other firms, president Putin has in his discussions with the heads of large privately held firms appealed to them to shoulder their responsibilities when the Russian economy and the ruble are struggling.