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Russia's central bank abandoned its daily control on the value of ruble against foreign currencies on Monday, while holding on to necessary interventions in case of threats to national financial stability.
Starting Monday, the bank "abolished the existing exchange rate policy mechanism, abandoning the interval of permissible fluctuations for the value of the bi-currency (dollar-euro) basket and regular interventions at the boundaries of this interval and outside it," it said in a statement.
The decision, however, did not imply that the bank fully gave up foreign currency interventions. Instead, it said such interventions are possible in case of emergence of threats to financial stability, according to the statement.
Central bank chief Elvira Nabiullina said the regulator would temporarily limit selling rubles to commercial banks in order to decrease pressure on the national currency.
The U.S. dollar and the euro plunged against ruble on the Moscow Exchange after the regulator's decision. The dollar fell by 1.69 rubles to 44.96 as of 13:05 Moscow time (1005 GMT) and the euro lost 2.04 rubles, declining to 56.
The ruble has lost more than a quarter of its value since the start of 2014 due to weakness in the Russian economy, which was caused by falling oil prices and economic sanctions imposed by the United States and its allies.
The bank also downgraded its economy outlook for 2015-2017, saying the Russian economy will enter stagnation in 2015-2016 with a growth by 1.6 percent forecast for 2017.
Internal and external negative factors will result in speeding up of the capital outflow from Russia, it said.
According to the bank, the Russian economy will lose 99 billion U.S. dollars in 2015, 60 billion in 2016 and 38 billion in 2017. Enditem
