(Bloomberg) -- Russia’s central bank said no emergency steps were required to prop up the ruble as measures already in place were enough to stabilize the market situation.
The Russian currency plunged after the US imposed sanctions on Nov. 21 against more than 50 lenders, including Gazprombank, Russia’s main payment channel for gas exports. That forced the central bank to halt buying foreign currency under the budget rule, which helped the ruble recoup some losses, amid speculation about another increase in the key rate.
“The measures that have been taken are sufficient, and we are seeing signs that the situation is stabilizing,” Philipp Gabunia, a deputy chairman of the Bank of Russia, told reporters Friday at a Moscow briefing transmitted via the bank’s website.
The financial system needs time to adjust, he said. The sanctions were “one-off factors” that caused “short-term imbalances” on the market.
President Vladimir Putin said Thursday that the situation was under control and there were “no grounds for panic.” Economy Minister Maxim Reshetnikov also said Friday there were no fundamental reasons for ruble weakness given the “strong” trade balance.
Still, the central bank’s actions won’t stop the ruble’s medium-term weakening, according to Alexander Potavin, an analyst with Finam in Moscow. Businesses will need time to restructure the logistics of cross-border payments and cash flows, leaving market volatility at an elevated level for now, he said.
If the authorities fail to make significant efforts to stabilize the currency and the price of Brent oil falls to around $70 per barrel or lower, then ruble weakening will accelerate, Potavin said, adding that the rate may return to the levels of March 2022, when the ruble broke 120 to the dollar.
The Bank of Russia has used interbank transactions to calculate the exchange rate since June, when the US sanctioned the Moscow Exchange. On Friday, it raised the official rate for the ruble to 107.7409 per dollar, compared with 109.5782 the previous day.
“If short-term volatility caused by problems with payments creates threats to financial stability, we have a sufficient arsenal of measures to resolve the situation,” the central bank’s Gabunia said. “And in this case we will use it.”
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