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Russian Central Bank Says Won't Devalue Ruble To Help Kremlin

Russian Central Bank Governor Elvira Nabiullina says the bank won't try to help the Kremlin close a budget gap by devaluing the ruble.

Russia's Central Bank denied a report that it might welcome a fall in the ruble's value to help the government close a gaping budget deficit.

A weaker ruble helps boost state coffers because the state gets its oil revenue in dollars. Reuters had reported that the Kremlin was considering a strategy of devaluing the currency to help ease pressures to cut spending and raise taxes, and hoped the central bank would go along.

But Russia's chief central banker Elvira Nabiullina dismissed that report as "sheer stupidity."

"We've shifted to floating exchange rate and our exchange rate policy is well-known," she said, adding that manipulating the currency for budget purposes would have "huge negative consequences."

Nabiullina said the bank was considering doing the opposite of what the story suggested: raising interest rates to try to boost the value of the ruble, whose renewed decline this month she said had raised the threat of inflationary pressures.

The ruble on February 11 reached 80.64 against the U.S. dollar and 91.48 against the euro for the first time since January.

"If inflation risks grow stronger...we don't rule out a toughening" of monetary policy, Nabiullina said.

Based on reporting by AP, AFP, and TASS