Published: 16 May at 2 PM Tags: Euro, Dollar, America, Eurozone, USA, Russia, Switzerland,
Yesterday the Ruble declined against the Bank Rossiiâ€™s target basket of currencies as the price of oil, a key Russian commodity, fell and Russian policy makers defied some economistâ€™s expectations by holding interest rates at their previous level.
As well as falling to 35.5898 against the central bankâ€™s basket of Dollars and Euros the Ruble hit 31.5225 against the US Dollar.
Although a third of economists participating in a Bloomberg News survey forecast that Bank Rossii would alter rates, for the eighth consecutive month the financial institution left its main interest rates unaltered.
The price of Brent oil also dropped for a fourth day.
In response to the Rubleâ€™s movement one Moscow-based foreign exchange expert commented that the currency â€˜reacted slightly to the central bank decision and oil, which is down. Combined it put a lid on us. The reaction fits the decision.â€™
However, the Ruble has since recouped losses, lifted by recovering oil prices and the imminent continuation of Russiaâ€™s monthly tax period.
The Ruble was able to strengthen to 31.3975 against the US Dollar and 35.4637 against Rossiiâ€™s basket of Dollars and Euros.
As Rosbank analysts stated: â€˜Recovering oil prices and approaching taxes will support the Ruble today [in the long term] the expected rates decision hasnâ€™t changed the balance on the Ruble market.â€™
Meanwhile, over in Europe the Swiss National Bank restated its commitment to keeping the Franc capped for as long as needed in order to protect Switzerland
â€™s economy from deflation.
Back in September 2011 the ongoing financial crisis, and particularly the fiscal concerns in the Eurozone, led the central bank to put a cap of 1.20 per Euro on the Franc in an attempt to safe-guard the Swiss economy. Although some labour unions have pressed for the SNB to move the level of the cap, it seems that the central bank will hold firm.
According to Fritz Zurbruegg, a SNB board member, â€˜The floor rate will remain in force as long as necessary to carry out our mandate if maintaining price stability. The current exchange rate still seems overvalued [...] the risk of another significant rise of the Swiss Franc against the Euro canâ€™t be ruled out.â€™
In its efforts to protect the ceiling the Swiss National Bank has accumulated almost 450 billion Dollars of foreign currency, but it isnâ€™t yet clear how those funds might be invested â€“ although Zurbruegg did intimate that the SNB wasnâ€™t considering founding a sovereign wealth fund for the reserves to be held in, asserting that â€˜Creating such a fund for investing the SNBâ€™s currency reserves wouldnâ€™t be sensible.â€™
Currently the Swiss Franc is trading against the Euro in the region of 1.2438.
As of Thursday, 16th May 2013, the Pound Sterling currency rates mentioned within this news item were as follows:
GBP EUR exchange rate was 1.1856, GBP USD exchange rate was 1.5281, GBP RUB exchange rate was 47.9855, and GBP CHF exchange rate was 1.4733.