The new symbol that was announced by Moscow last week part of the effort to internationalize its currency
Russian authorities have selected a new symbol for their currency and it happened in a rather unique way. The usual RUB will be substituted by the Cyrillic letter P (which sounds like R) with a small bar through it (as you see it on the picture on the left). 280,000 people have participated in the vote on the Bank of Russia’s website and have selected the symbol from 5 available options.
As part of the administration’s efforts to open further the Russian economy and liberalize its currency to be free floating by 2015 this effort aims at creating a locally and internationally recognizable symbol. The Central Bank stated on its website that having a symbol is a simple cosmetic step and the main prerequisites for a free float will be for the economy to develop further and to increase its competitiveness.
According to data from the Bank of International Settlements the Russian Ruble is currently the 12th most traded currency in the world. Should it enter the forex market as a freely tradable currency it will become the ultimate commodity currency – Russia is the world’s biggest energy exporter.
The Bank of Russia has been managing the Russian Ruble since 1999 with daily market operations and President Vladimir Putin has recently announced a framework that aims at its liberalization by 2015 therefore allowing the central bank to start inflation targeting. Average inflation rates in Russia have fluctuated wildly for a while. Rates were close to 25% at the beginning of last decade and have been gradually falling since with recent data pointing to about 6.5%.
Mr. Putin is clearly realizing that in order to contain inflation, interest rate targeting must be introduced sooner or later, and the size of the Russian economy in itself is going to present some challenges especially in the future. Despite the fact that certain risks are associated with commodity price fluctuations, the FX market participants especially from Russia will be keen to trade their own currency.