Ruble slides as Russian central bank buys US dollars

In order to replenish international reserves, the bank of Russia decides to purchase dollars

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

The Bank of Russia announced on Thursday, that it will conduct regular foreign currency purchases in the domestic foreign exchange market in order to increase its international reserves. The central bank said the decision was taken with consideration of the normalisation in the domestic foreign exchange market. 

According to the announcement made by the Central Bank of Russia, dollar purchasing operations will be held daily in the amount of $100-200 million. To minimise the impact on ruble exchange rate dynamics, US dollar purchases will be carried out evenly during the trading day, the central bank says. Also, the bank said it can adjust the volumes of the operations if any substantial changes would occur in the market. 

Upon the news, the ruble fell 1.5 percent to 50.02 per dollar. The ruble has been the best performer this year compared to other currencies in the world. One of the biggest oil exporters, Russia has benefited highly from the boost in oil prices, while cease-fire in eastern Ukraine supported the ruble, as well. 

As the dollar kept weakening on Thursday, global currencies extended their gains. The Turkish lira reached a one-month high, while the euro and Asian currencies also increased.

TRTWorld and agencies