Efforts by some countries to weaken their currencies to stimulate growth are “especially worrying,” Russian Finance Minister Alexei Kudrin said at the International Monetary Fund’s annual meeting in Washington. International policymakers failed to narrow their differences and Brazil warned that a “currency war” was under way. While the United States criticized China for undervaluing the yuan, officials from emerging nations blamed low U.S. interest rates for flooding them with capital. Global economic recovery is significantly slowing as the effect of anti-crisis stimulus measures. A further slowing of economic growth in the second half of 2010 and 2011 is a cause for concern shared by many experts.

The BRIC countries “have agreed on a position that exchange rates aren’t themselves a problem,” Deputy Finance Minister Dmitry Pankin said. “Rather, they are a consequence of deeper processes, such as tendencies to save, to invest, of the investment climate.” Capital “fluctuations” may also pose a risk for Russia, Pankin added.

 After the IMF meeting the first measure taken by Moscow was to move away from managing the rouble toward a free-float. The Central Bank widened the so-called floating corridor it uses to guide the national currency against a basket of dollars and euros and abolished a wider band set during the credit crisis to “increase flexibility” of the exchange rate. This decision potentially allows for more volatility but gives the bank the ability to target inflation rather than the exchange rate.

“The more flexible rate of the rouble is not linked to any kind of devaluation race but rather is aimed at minimising or eliminating the use of interventions by the Central bank,” Alexei Kudrin explained. Prime Minister Vladimir Putin said that the rouble was in an “optimal position” and that he didn’t expect the currency to weaken or strengthen “excessively.” The rouble’s value was a major concern for the government and ordinary Russians at the onset of the 2008 financial crisis as it tumbled to lows that raised the spectre of Russia’s 1998 financial meltdown.

According to Kudrin, to ensure stable growth in 2011 Russia needs oil prices above $60 per barrel, although the country’s economy is less vulnerable than those of developed markets. This level is 21 percent less than this year’s average price. The Urals blend, Russia’s benchmark for oil exports, has risen 7.3 percent to $82.31 per barrel this year. It averaged $76.08 during the period and dropped to a low of $67.31 on May 25, according to data compiled by Bloomberg.

“Russia is less vulnerable than other countries,” Kudrin told journalists. “Developing economies are as a whole better off, have more optimistic outlook.” However, substantial uncertainty remains and that if the situation in developed countries deteriorates it would hurt emerging markets. “This would impact energy producers, metal producers, trade, capital outflows,” said Russian Finance Minister.

Moscow feels safe. Reserves jumped $6.7 billion to $501.1 billion, the Russian Central bank said. It’s the first time the reserves have broken $500 billion since mid-October 2008, a month after the collapse of U.S. brokerage Lehman Brothers triggered the global credit crisis. Russia reduced its reserves from a record $598.1 billion at the beginning of August 2008 to $376.1 billion in March 2009, the lowest since at least January 2008. The Central Bank buys and sells foreign currency to manage the rouble and prevent swings that hurt exporters and used the reserves to engineer a “gradual devaluation” of the currency between November 2008 and the end of January 2009, as the global economic crisis and credit crunch hit.

Officially Euros account for 41 percent of Russia’s reserves, while dollars constitute 47 percent, British pounds — 10 percent, Japanese yen — 2 percent, along with a small amount of Swiss francs. Only China and Japan have larger reserves than Russia.