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Russia ends foreign currency purchases as ruble takes dip

The Central Bank of Russia began daily purchases of foreign currency in May as part of a long-term strategy to rebuild its foreign exchange reserves.

By Jared M. Feldschreiber
The Central Bank of Russia (CBR) said Wednesday that it was halting purchases of foreign currency to replenish the country's international reserves. Photo by WikiCommons
The Central Bank of Russia (CBR) said Wednesday that it was halting purchases of foreign currency to replenish the country's international reserves. Photo by WikiCommons

MOSCOW, July 29 (UPI) -- The Central Bank of Russia announced Wednesday it was halting purchases of foreign currency to replenish the country's international reserves.

The bank began daily purchases of foreign currency in May as part of a long-term strategy to rebuild its foreign exchange reserves, BloombergBusiness reported.

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"Bank of Russia suspended operations in the replenishment of international reserves, which was associated with an increase in volatility in the domestic market," CBR reported through a statement on its web site. It was not clear how long the central bank intends to suspend its forex purchases, as it had last suspended its operations on June 5.

Analysts indicated CBR is seeking to keep the ruble within a desired range; somewhere along 50-60 per U.S. dollar.

Last week, CBR said it is planning a new rating agency, expected to start work during the fourth quarter of 2015.

"The Russian market needs a strong rating agency with a high level of corporate governance and professional competence," the bank announced.

Russia is experiencing its first recession in six years, Fortune reported in May, amid a slump in oil prices and U.S. and European sanctions over Russia's military entanglement in Ukraine.

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The ruble collapse this year was the worst since 1998, and has spurred inflation.

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