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Russian top banker: ruble to float in coming years

MOSCOW - Russia’s Central Bank said Friday it aims to let the ruble, whose value is now pegged to other currencies, float freely on currency markets in the next few years.

Russia pegs the ruble to a basket of the dollar and the euro, allowing it to float only within a range of 4 percent and intervening if necessary. The aim is to avoid the economic shock of sudden swings in the currency’s value.

Central Bank chief Sergei Ignatyev said that next year it will still operate ¢the managed floating currency rate of the ruble” but that in the next four years it ¢will continue to move towards a regime of a freely floating currency rate,” easing the ruble’s dependence on the currency basket.

Ignatyev said that will allow the central bank to increase the role of interest rates in its monetary policy. Interest rates help control economic growth as well as the relative value of a currency.

Russia has been spending billions of dollars from its currency reserves in the past weeks to shore up the ruble, which has been falling on sagging oil prices and growing demand for dollars and euros by investors and banks hit by the financial crisis.

The Central Bank said Thursday Russia’s hard foreign currency reserves dropped a record $31 billion last week as the country spent money on keeping the ruble from plummeting and the banking sector from melting down.

Russian officials have sought to quell fears of a possible ruble devaluation, pledging that the government will not allow the national currency to fall dramatically.