IN A MOVE TO INCREASE investors' confidence and promote economic stability, the Russian government and the Central Bank of Russia fixed the ruble's exchange rate against the dollar within a band and did not allow it to float freely.1 The new measure, which was in effect from 6 July until 1 October, set a ceiling of 4,300 rubles and a floor of 4,900 against the dollar.2 The government decided on 24 August to extend the measure until 31 December. The trading band marked the first time Russia had officially targeted the ruble rate since the collapse of the Soviet Union in December 1991. After four years of steady nominal depreciation against Western currencies, the ruble has turned around, recovering 11.1 percent of its nominal value since its historic low of 5,130 rubles to the dollar on 29 April (see Table 1). On 5 July, the day the government announced the "ruble corridor," the ruble closed at 4,559 rubles to the dollar on the Moscow Interbank Currency Exchange (MICEX).3

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