RUSSIAN CENTRAL BANK STRESSES STABILITY.

Markets have reacted positively to Russia’s announcements last week of a new exchange rate policy and increased convertibility for the ruble. The moves are intended to reassure investors that, despite the current electoral uncertainty, Russia remains committed to maintaining a stable currency. The new ruble corridor will make depreciation of the currency against the dollar more predictable and keep it in line with the target rate of inflation of 1.9 percent a month in the second half of 1996. As of July 1, the Central Bank will allow the ruble to depreciate gradually and will defend the currency against steep falls, using its substantial reserves of about $13 billion in Central Bank and Finance Ministry gold and foreign exchange assets. The new corridor will start at 5,000 to 5,600 to $1, and end on December 31 at between 5,500 and 6,100 rubles. The precise value will be set each day.

The fact that the value will be set by the Central Bank, whose independence is guaranteed by the Russian constitution and whose chairman cannot be easily replaced, is meant as a signal that "Russia’s economic policy will continue unaltered, even if a Communist president is elected in June," Kommersant-daily commented on May 17. The pre-announced depreciation may also help to some degree to mollify producer lobbies, who have been complaining that they are being priced out of markets home and abroad by the stability of the exchange rate. The announcement of the new ruble corridor fits in with the move that is now planned for full current account convertibility of the Russian currency. For many purposes, the ruble is already convertible, but the announced intention of meeting all the IMF’s "Article 8" provisions on current account convertibility will ensure that, while tight restrictions will remain on the capital account, exporters have full disposal of their hard currency earnings and importers can obtain foreign currency without bureaucratic hurdles. Investors should be reassured by the fact that the Central Bank is constitutionally independent and, even if the Yeltsin administration is