"The Central Bank Directors' Board has just finished session. It determined to cut the rate from present-day 25 per cent to 10 per cent," Konstantin Korischenko, bank vice-president, said to an international conference underway in Moscow on, "The Russian Rouble: Fifteen Years of Progress toward Free Convertibility".
The Central Bank resolution enters into force the instant it is made public, he added.
A Novosti reporter asked Mr. Korischenko what, he thought, the new arrangement would bring. It certainly does not threaten whatever undesirable results, and will have the least possible effect on the actual currency market balance, reassured the bank boss.
Certain foreign traders will gain as they previously had not enough free currency to cope with the high standards. The reduction will make their life easier, he said.
When asked just what had moved the Central Bank to reduce the rate, its vice-president said the bank intended eventually to give up compulsory revenue exchanges altogether on a gradual arrangement. He did not specify further reductions-the bank may cut the rate next time to 5 per cent, or 2, or abolish compulsory exchanges altogether, he only said.
Another reporter asked Mr. Korischenko why the Central Bank was not making the abolition just now. As he explained, the acting currency regulation and monitoring law strictly stipulates compulsory exchanges. Abolition will clash with the law, which is too early to venture now.
The Central Bank is not yet sure whether it will make interventions in the Euro. Meanwhile, it makes regular interventions in US dollars, now to exchange them into roubles, now the other way round. To practically tackle the prospects of Euro interventions, Russia needs a liquid sector of European currency transactions, the bank vice-president went on.
The MICEX, or Moscow Interbank Currency Exchange, is working for a full-fledged Euro/rouble transaction segment, which promises to send its liquidity skyrocketing. Meanwhile, MICEX rouble/Euro transactions make a mere 1 per cent of rouble/dollar deals.
The rouble is spectacularly rising vs. the US dollar-a painful issue for many Russians. As Mr. Korischenko came over to the matter, he advised the Russian public to soberly weigh prospects for the several months to come, or longer. It is extremely risky to keep one's private savings in foreign cash, whether it is the US dollar or the Euro, what with drastic ups and downs of currency rates, he warned.
The rouble will certainly not soar up against the dollar-it has every chance for smooth progress as the world's forces to gain or lose with a weaker dollar are presently balanced out between themselves, remarked the Central Bank vice-president.
