Russia’s central bank said that it plans to set a new way to calculate the official exchange rate for the ruble against the dollar after Western sanctions in response to the country's invasion of Ukraine threw the country's currency into turmoil.
The Bank of Russia on Monday said it would calculate the ruble's exchange rate against a wider range of quotes to reduce volatility in its currency. The bank will set the official dollar exchange rate using Moscow Exchange transactions from 10 a.m. to 4:30 p.m. Moscow time. So far it calculated the official rate from those conducted between 10 a.m. and 11:30 a.m. local time.
The bank hasn’t specified exactly when the new mechanism will come into force.
Currency traders and investors have noted a growing gap between the ruble’s dollar value on the Moscow Exchange and its trading on international markets. That partly stems from capital controls that Russia’s central bank has put into place to stem the ruble’s rout and also from foreign banks’ unwillingness to touch the Russian currency following Western sanctions.
The lack of ease in buying and selling the ruble has led to wide swings in the ruble’s value.
The official rate of the ruble against the dollar is particularly important for some outstanding foreign-currency contracts, traders say. Prior to Russia’s invasion of Ukraine, most contracts that speculated on the ruble’s value used the central bank rate to determine its value. A strong difference in the ruble’s onshore rate and its offshore rate is likely to cause outsized gains or losses for some traders.
The Moscow Exchange said Saturday the country’s main stock market will stay closed this week, through March 18, though its currency market is open. The stock market hasn’t opened since Feb. 25, the day after the invasion and just before the West unveiled a punishing round of sanctions on Russia’s financial system.
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March 14, 2022 at 04:03PM
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Russia Eyes New Way to Set Ruble-Dollar Exchange Rate - The Wall Street Journal
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