Russia's central bank has replaced its head of monetary policy after President Vladimir Putin criticised the failure of emergency measures to halt the ruble's decline.
Dmitry Tulin, a former central bank official who also worked at the International Monetary Fund and Deloitte, will take on Ksenia Yudaeva's role as first deputy governor in charge of monetary policy, the Bank of Russia said in a statement 14 January. Yudaeva, who remains a first deputy to Governor Elvira Nabiullina, will focus on forecasting, strategy and financial stability, she told reporters in Moscow.
Yudaeva, who joined the bank in September 2013, was in charge of monetary policy as the regulator lurched from one crisis to another after Russia annexed Crimea from Ukraine last year. While policy makers deployed emergency steps including interest-rate increases and spent 76 billion euros in interventions to prop up the currency, Putin last month scolded the regulator for not reacting to the crisis more quickly.
"Expectations were that heads would roll after the fiasco over management of the exchange rate and monetary policy late last year," Timothy Ash, an economist at Standard Bank Group in London, said by e-mail.
The Russian currency has extended its decline since the end of 2014 to 6.7 per cent, surpassed only by the Belarusian ruble among more than 170 currencies tracked by Bloomberg.
Policymakers are struggling to contain the country's worst currency crisis in almost 17 years as the ruble lost almost 50 per cent against the dollar in the past 12 months. The central bank shifted to a free-floating exchange rate ahead of schedule in November and is overseeing a 1 trillion-ruble (13.4 billion-euro) bank recapitalisation plan.
The ruble weakened 41 per cent against the US dollar last year. On 16 December, the central bank took its biggest step to shore up the currency, raising its key interest rate to 17 per cent from 10.5 per cent in a surprise announcement just before 1 am in Moscow that day.
With an earlier rate increase, a smaller step would have been sufficient, Economy Minister Alexei Ulyukayev said in an interview with Bloomberg TV 14 January.
"The earlier you do it, the smaller the jump, so it could be 13 per cent or 14 per cent or something like that," he said. Still, the ruble now has "more chances for appreciation than for depreciation."
Last month's rate move was the largest single increase since 1998, when Russian rates soared past 100 per cent and the government defaulted on debt. The ruble plummeted to 80 rubles per dollar the next day.
With oil near $45 a barrel, gross domestic product will probably shrink 4 per cent to 5 per cent this year, Ulyukayev said.
The central bank last month forecast a decline of 4.5 per cent to 4.7 per cent with crude at 60 US dollars.
The ruble's weakness helps offset the budget revenue lost because of the decline in energy prices, Ulyukayev said.
"We are losing something with the oil prices, but we are winning with the devaluation, in terms of the budget," Ulyukayev said. "We think we have possibilities in 2016 and 2017 to have a positive real GDP performance."
The central bank will maintain its strategic and tactical goals in monetary policy after Tulin replaces Yudaeva, Nabiullina said in an e-mailed statement on 14 January. He will take over in the "coming days," she said.
The central bank's "comments suggest a high degree of policy continuity," Anatoliy Shal, JPMorgan Chase & Co.'s chief Russia economist in Moscow, said in an e-mailed report. "Tulin has wide experience in bank supervision and monetary policy."
Tulin, 58, joined the Soviet central bank in 1978 after graduating from the Moscow Financial Institute. He later served as the Russian monetary authority's deputy chairman in the middle of the 1990s and in 2004-2006. Nabiullina described him as a "very responsible" official, who has a "deep understanding" of monetary policy.
"We view Tulin's appointment positively," Natalia Orlova, chief economist at Alfa Bank in Moscow, said by e-mail Thursday. "Reshuffling responsibilities within the CBR team after a round of ruble instability suggests that the CBR will now try to manage market expectations instead of denying their importance."
With assistance from Elena Mazneva in Moscow and Aaron Eglitis in Riga.
Yuliya Fedorinova, Anna
Andrianova, Ryan Chilcote
LE HTIKUVA / AFP PHOTO / YURI KADOBNOV