Russia considers rouble appreciation to stave inflation
by Brian Turner
Russia indicated Wednesday that it might let the rouble appreciate more than had been planned in order to ease inflation, as oil revenues feed Russia’s high inflation rate.
The first deputy chairman of the Russian Central Bank (CBR) said the effective exchange rate of the rouble might be allowed to appreciate as much as 9 percent this year, one more percentage point than had been planned.
Consumer prices in Russia went up 5.3 percent in the first quarter of 2005 and some forecasts have inflation for the full year possibly topping 13 percent. The CBR had previously announced that its goal was to reduce inflation to 8.5 percent in 2005, down from 11.4 percent last year, but this goal is now considered optimistic.
Even with the extra appreciation, the rouble could end the year nominally weaker if inflation does top the 13 percent mark. The CBR intervenes in the currency market daily to limit the volatility of the rouble.
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