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MOSCOW, May 22 (Reuters) - The Russian central bank has cut the size of the interventions it carries out to support the rouble, signalling a return to its strategy of allowing the rouble to float more freely.
The move reflects an easing of market turmoil linked to fears of Russian intervention in Ukraine and Russia’s annexation of Crimea in March.
On Thursday, the central bank announced it had reduced the size of its daily interventions by $100 million for intervention ranges within the rouble’s floating corridor.
The bank said the change was made in order to increase the flexibility of the rouble in preparation for an inflation targeting regime.
Previously the bank had spent $400 million a day when the rouble was trading within 95 kopecks of the upper edge of the top range of the corridor, or $200 million when it was trading in a range of one rouble below that.
These amounts will now be reduced to $300 million and $100 million respectively.
The corridor is seven roubles wide and currently stretches from 36.40 to 43.40 against the basket. The rouble is now trading near the middle of the corridor where the central bank carries out no interventions.
The bank aims to adopt inflation targeting from the start of next year, a policy framework that envisages allowing the rouble to float, while controlling interest rates more tightly.
However, this strategy received a setback in March, when the central bank introduced measures to control the rouble more tightly, reacting to a sharp sell-off provoked by the crisis in Ukraine.
One of the steps introduced in March was to increase the size of accumulated interventions, needed to provoke a shift in the floating corridor, from $350 million to $1.5 billion, making such shifts much less frequent.
In its statement on Thursday the central bank said the $1.5 billion threshold would remain in place for now.
This means that although the rouble will now become more flexible within its corridor, the corridor itself is not being made more flexible. The central bank carries out unlimited interventions when the rouble is at the edge of the corridor.
The rouble strengthened slightly after the central bank announcement before falling back.
At 0655 GMT it was trading at 39.95 against the basket, 0.23 percent stronger on the day.
The rouble has gained some 3 percent during May, as markets react positively to an easing in international tensions around Ukraine, giving the central bank more scope to resume its policy of gradually withdrawing support for the currency. (Reporting By Jason Bush, editing by Elizabeth Piper)