The euro’s exchange rate against the US dollar dropped to 1.2194 EUR/USD on Tuesday. The dollar continued to strengthen on Wednesday, and the European currency dropped to a three-month low of $1.2056.

This affected the Russian market, the Kommersant says. Russian market traders recalled the words of Central Bank officials that the ruble’s exchange rate is based on a basket of currencies, which means that the Central Bank would not take strong measures to prevent the dollar strengthening. Earlier, banks used to close positions expecting the weakening of the US currency. But this time they did not do so. As a result, the dollar’s exchange rate rose RUR 0.05 to 28.6 RUR /USD on the Moscow Interbank Currency Exchange (MICEX), and it rose further to 28.645 RUR/USD later.

Correction on the Russian market on March 3 was determined by the situation on the euro/dollar market, according to the head of trading operations of Guta Bank. “The events followed the significant strengthening of the dollar because there was a huge amount of uncovered short positions,” he told the newspaper.

The Central Bank helped ease pressure on the market. It sold an estimated $1bn at 28.635 RUR/USD. Perhaps, the dollar will continue rising on Thursday. But this will only attract new sellers. “Clients who refrained from large sales so far, will do it now,” Sergei Shchepilov, a dealer at Reiffeisenbank Austria, said. “It is too soon to speak about a trend change, this is only correction,” a Guta Bank expert said. Indeed, the dollar used to rise by RUR 0.15-0.20 in early February 2004 and in December, October and September 2003. But every time the buyers of dollars faced resistance from the Central Bank, the Kommersant says.