The advent of Perestroika in 1991 led to a more open Russian economy compared to the previous period. 1998 economic crisis in Russia led to establishment of a floating exchange regime with heavy interventions by the government through direct and indirect policies. After the 2008 global economic crisis, the Bank of Russia adopted a dual currency model where both US Dollar and Euro currencies were used to stabilise the Ruble. In 2013, the government increased the no-intervention region from 1 to 3.1 Ruble due to currency stability. In 2014, US and European Union imposed targeted sanctions on Russia which affected the prices of commodities, particularly oil, leading to erosion in value of the Ruble relative to other currencies. The Bank of Russia intervened through interest rate policy by increasing interest rates from 10.5% to 17%.
There exist a multitude of exchange rate regimes in the period 1991-2014. In the period 1991-1998, the exchange rate regime was fixed and pegged on the USD due to spiralling of prices that caused inflationary pressure to the economy. The Bank of Russia heavily intervened to influence the exchange rate system. There were also huge controls unto capital inflows and outflows into the economy. After the 1998 economic crisis, the Bank of Russia adopted a managed floating regime where the government directly or indirectly through interest rate policy influenced the exchange rates until the 2008 global economic crisis. After 2008economic crisis, a managed floating exchange rate regime was adopted. Under this regime, the Bank of Russia allowed Ruble to float within an agreed margin determined based on the ratios of the foreign exchange reserves placed at USD 55% and EUR 45%. Through this, a neutral zone was determined where the Central Bank had no intervention to the exchange rates. The exchange rate regime from 1991 to 2014 can be said to be transitionary from fixed to managed floating and ending with a near fully floating system.
The establishment of operational bands gave the speculators effective rate floors and ceilings. The speculators now would know a predetermined rate up to which a currency would appreciate or depreciate based on the lower and upper bands respectively. This has a destabilizing effect to the speculators who wish to buy at the lowest price of a currency and sell when it appreciates to the maximum within the shortest time frame. This is not possible when the maximum and minimum prices are predetermined.
The western sanctions had significant impact on the value of the Ruble. However, its impact was accelerated by the plummeting prices of oil. This is recognised by the erosion of value of the Ruble at the start of the sanctions which was accelerated by the fall in oil prices, since it is the main export commodity of Russia. It is the combination of plummeting of oil prices and sanctions that has the greatest impact, though the oil prices plummeting has a greater devastating effect.
Currently, the Central Bank of Russia employs a floating exchange regime where the price of the Ruble is determined by market forces of demand for the foreign exchange and the supply available in the market. However, the Central Bank of Russia is allowed to intervene to ensure stability of the Ruble. This is through monetary and fiscal policies that mainly target the excess inflationary pressure in the market. The conversion rate of 1 USD to Ruble has been rising from 56 in January 2018 clocking highest in August 2018 at 72 before declining to 64.5 currently. This implies that the Ruble was depreciating in 2018 before appreciation in 2019. Equally, the conversion rates with respect to Euro has appreciated with 1 EUR/RUB trading at 75 in April 2018, depreciating to 80 in September 2018 and currently at 72. The Ruble has stabilised much more under the floating exchange regimes compared to other regimes.