Bi-currency versus Single-currency Targeting:Lessons from the Russian Experience

摘要

This paper examines how the 2005 shift in Russian exchange rate policy from US dollar (USD) single-currency to USD-EUR (euro) bi-currency targeting has impacted domestic interest rates. The finding show that this policy shift has disconnected Russian interest rates from US dollar-denominated interest rates, while instead linking them to a synthetic interest rate composed of USD and EUR rates at the same proportion as that of these two currencies in the currency basket against which the ruble's exchange rate is set. The Russian experience shows that while the adoption of bi-currency targeting may help ensure that domestic interest rates are less dependent on the monetary cycle of a single country, these rates are instead likely to reflect financial developments in all countries whose currencies are included in the currency basket. This insight is likely to be relevant for other countries that pursue basket-targeting policies.