CBR considers rouble appreciation

Story link: CBR considers rouble appreciation

The Russian Central Bank (CBR) might allow the rouble to appreciate as much as 9 percent this year, a percentage point higher than had been previously planned, according to the first deputy chairman of the bank.

This move, if taken, would be an effort to ease the high Russian inflation that has only been exacerbated by rising oil revenues.

The CBR intervenes in the currency market daily to limit the volatility of the rouble. Even with the extra appreciation, the rouble could end the year nominally weaker if inflation tops the 13 percent mark predicted by some analysts.

The CBR had announced earlier that it hoped to reduce inflation to 8.5 percent in 2005, down from 11.4 percent last year.

This is now seen as an overly optimistic plan. Consumer prices rise 5.3 percent in the first quarter of 2005, and a 13 percent inflation rate for the year is seen as not out of the realm of possibility.