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19 May, 2015 11:22

Russian regulator acting ‘adequately’ as economy stabilizes – IMF

Russian regulator acting ‘adequately’ as economy stabilizes – IMF

The Central Bank of Russia is taking effective steps to stabilize the national currency and the economic situation as a whole, according to the Deputy Managing Director of the International Monetary Fund (IMF) Min Zhu.

“I think the Russian Central Bank is reacting adequately to the current situation,” the banker said at a conference on doing business with the BRICS countries in Washington on Monday, RIA Novosti reported . He also added that the CBR is "working well and gently".

READ MORE:Worst over for Russian economy, time to talk success - economists

The Russian economy has improved significantly due to the prompt action of the Russian regulator, according to the IMF official. “We see that the Russian ruble has stabilized along with the country’s economy,” Min Zhu said.

If you stop following #ruble/#dollar exchange rate and #oilprices, here is the renewed chart pic.twitter.com/Mt16BBvqgw

— Russia Direct (@Russia_Direct) May 14, 2015

It is important to maintain good results in future, to maintain the flexibility of the exchange rate in line with market trends, the deputy head of the IMF said. "This will contribute to further stabilization of the Russian currency and the economy, and create a specific reserve for economic development in the long term."

READ MORE: Russian ruble seen as world’s best performing currency, hits 2015 high

Russia’s economy had recovered from last year’s panic following the slump in oil prices, Russian and US economists agreed lately, praising it as an “underrated land of opportunity.” The Russian ruble has been also recognized as the best performing currency in the first quarter of 2015, mostly due to the actions of the Russian regulator.

The Russian currency has gained almost 17 percent in 2015, after it lost about 46 percent last year. It grew to 49.27 against the US dollar and 55.22 against the euro at 14:15 MSK on Tuesday on Moscow Exchange. The ruble hit rock bottom against the dollar on December 16, when it lost more than 20 percent, with one dollar buying 80 rubles.

The CBR has employed a number of financial tools since the currency crisis erupted at the end of last year. The main one was changing the key interest rate. Now the regulator is weakening the strings on the country’s borrowers, as it’s been easing the rate citing improvements in a currency market. Most recently it cut the interestrate to 12.5percent last month which is the third rate cut this year. With the previous two cuts in March and January the regulator tried claw back on the 6.5 percent increase to 17 percent enforced on December 16. That was done in an attempt to halt the ruble slide.

As of last November the ruble is free floating after the CBR unpegged it from the dollar and the euro. However, last week the regulator said it would once again be buying foreign currency in the domestic market, as the ruble rate has stabilized.