Two years after withdrawing its 10-ruble banknote in favour of a new coin, the Bank of Russia announced this month that it would once again be printing the notes and putting them into circulation.
“In the fourth quarter [of 2011] we once again began printing the paper 10 ruble note, as banks had begun to complain of a deficit of the coins,” Central Bank head Georgry Luntovsksy told The Moscow News.
The plan to remove the banknotes was due to the Bank’s belief that the low-value note (worth 30 US cents) was too costly to reproduce and was impractical to contemporary currency users. When they made the decision to nix the paper banknote, the Bank of Russia anticipated they would save approximately 18 billion ruples over the following decade.
This isn’t the only move the Bank has been making with regards to the ruble. After a volatile year that saw the currency fall nearly 17 per cent from its year high amid fears of a euro zone collapse, the Bank announced this week it would allow more daily fluctuations in ruble trading.
According to the Wall Street Journal, market experts say this step could very well “anticipate higher volatility in the currency due to instability abroad and political uncertainty at home.”
“Ultimately, we think the central bank expects pressures on the ruble to mount in one direction or another due to a variety of possible reasons, including geopolitical risks in the Middle East and euro-zone as well as domestic politics, and is working to increase the flexibility of the system,” Alexei Moiseev, chief economist at VTB Capital, told the Wall Street Journal.
Russia’s central bank has gradually taken a more hands-off stance on managing the ruble as it moves to a policy of inflation targeting and an eventual free float of its currency, the financial magazine reported.
“The regulator last widened the ruble’s trading band on March 1, expanding it to five rubles from four rubles.”