The Russian ruble

The ruble is the currency of the Russian Federation. The ISO 4217 code is RUB or 643.

The Central Bank of the Russian Federation holds the exclusive right to issue ruble banknotes and coins. Notes of 1997 with modifications of 2001 and 2004 and coins of 1997 are circulating at the moment.

The Central Bank of the Russian Federation sets the official exchange rates of foreign currencies against the ruble. The rate of the ruble is set according to the Provision for setting and publication of the Central Bank’s official exchange rates against the ruble.

The calculation method of the real exchange rate is based on the correlation of indices of consumer prices both in the country and outside taken in proportion to the share of every country in external turnover.

The bi-currency basket is an operational benchmark of the Central Bank’s exchange policy. The bi-currency basket was introduced on February 1, 2005 in order to set the ruble’s real exchange rate against the major currencies - the U.S. dollar and the euro. When bi-currency basket was put into action, it consisted of 0.1 euros and 0.9 U.S. dollars. The current value was set on February 8, 2007. Nowadays the bi-currency basket consists of 0.45 euros and 0.55 U.S. dollars. Currently the bi-currency basket is fixed at the level of 34 rubles. However, for flexibility of the rate formation the Central Bank does not use a strict bind to this rate, allowing the value of the bi-curency basket move within the acceptable fluctuations’ range.

The Central Bank interfered in exchange rate’s management in some exceptional cases until May 14, 2008. Intervention was implemented only in case the supply of the currency was too high and it was not advisable to let the ruble strengthen, and vice versa the demand for the currency was high and the rate of the ruble dropped. Since May 2008 the Central Bank has regularly carried out interventions within the permissible price range.

Besides Central Bank’s interventions, prices on crude oil, gas, nickel, gold, and platinum influence the ruble’s exchange rate and the exchange rates of the other commodity currencies. The world indices, such as MSCI World, the American DJIA-30, the British FTSE-100, the German DAX, the indices of developing countries, such as MSCI EM, the Russian RTSI, MICEX, and MSCI Russia reflect global investors’ attitude to risk.

The current situation on the Forex market in Russia is characterized by a lack of obvious tendency; the ruble grows and then declines; national currency rate fluctuations are hard to foresee.

Any negative events either in Russia’s or in world’s economy increase the possibility of default on Russian bonds and lead to capital outflows from Russia and the ruble’s plunge. Unfavourable economic statistics from Russia lowers investors’ desire to risk and leads to growth of credit default swaps (corporate security). As a result, despite high, from historic perspective, crude oil prices, the rate of the global risk is still high and it may withhold capital inflows in the Russian economy and prevent the ruble from strengthening.

Russia in BRICS

The Russian Federation has been in BRICS since 2006. BRICS is a group of countries consisting of Brazil, Russia, India, China, and South Africa. BRICS performance on the global arena demonstrates forward movement towards development of a multipolar system of international relations and increasing of economic interdependence. BRICS’s influence in the international arena is a result of growing economic power of its member states and their important contribution to global demography and natural resources supply.

The BRICS member states are distinguished by their large, fast-growing economies, and significant influence on regional and global affairs due to natural resources. Russia is the major exporter of mineral resources.

Goldman Sachs estimates that Russia’s economic potential in BRICS is so high, that Russia can become one of the dominating economic systems by 2050.