The ruble floats freely. What does it mean?

The official exchange rate of the ruble to foreign currencies is set every day by the Central Bank. The basis is the price of the ruble against the US dollar at daily trading on the Moscow Exchange. Based on this rate, the Central Bank calculates the value of the ruble relative to other foreign currencies.

Yes. The Central Bank influences the ruble exchange rate if it changes too sharply. Recently, the ruble has been constantly falling in price, winning back several points from time to time. The Central Bank believes that these differences occur due to players who make money on the difference in exchange rates, and because of fundamental changes in the economy - Western sanctions and low oil prices.

If during trading it becomes clear that the ruble is sharply falling in price or, conversely, becoming more expensive, the Central Bank carries out foreign exchange interventions - operations aimed at stabilizing the exchange rate. The ruble is getting cheaper - the Central Bank is buying rubles. The ruble becomes more expensive - it sells. At the same time, the value of the national currency is assessed not relative to the dollar or euro, but relative to the bi-currency basket - since 2007 it has been 45 euro cents and 55 US cents. In October 2014 alone, the Central Bank spent $30 billion on maintaining the national currency—about 7% of Russia’s total gold and foreign exchange reserves.

Until November 10, the Central Bank carried out currency interventions if the exchange rate changed by more than 4.5 rubles in any direction. All market participants could know in advance at what value of the ruble the Central Bank would intervene, and how many rubles it would sell or buy. This policy is called “managed floating ruble exchange rate.” The Central Bank believes that this approach only makes life easier for players who make money on currency differences, and there is no point in fighting speculative growth with such measures. Now the Central Bank has moved to a “free ruble exchange rate” - it has stopped focusing on pre-agreed boundaries for the value of the ruble and will decide when and how to carry out currency interventions based on the situation.

This is unknown. The ruble exchange rate is determined by the market, and its behavior is impossible to predict. The Central Bank believes that the ruble has fallen so much because of Western sanctions (some large Russian companies are not allowed to take out loans in the EU and the US) and low oil prices - apparently, the exchange rate will strengthen when the sanctions are lifted and the cost of raw materials rises.