Russia: The Ruble

Background:

Russia's currency, the ruble (or rouble), was previously the currency of the Soviet Union and of pre-Soviet Russian Empire, going back about five centuries. The ruble is only partially convertible and tends to be managed by the Central bank of Russia (CBR) through its interventions in the foreign exchange market. The ruble, like other commodity currencies tends to move with the price of commodities like oil that Russia exports, as do portfolio inflows into the Russian debt and equity market.

In 2005, Russia switched from a dollar peg to a basket of dollars and euros. Since then it gradually increased the euro share of the basket until it reached 45% in 2007. Russia has also allowed appreciation against the basket and widened the trading range to fight inflation and deter speculative inflows. During the global financial crisis, as the price of oil declined and capital inflows turned to outflows, Russia tried to defend its basket peg, and adopted a policy of gradual depreciation of the ruble rather than a large one-off devaluation. As a result, the ruble depreciated by 30% against the basket between late 2008 and early 2009.