The bank said in a statement that it began targeting a dual currency basket -- made up of 90 U.S. cents and 10 euro cents -- on Feb. 1 and would gradually raise the share of euros.
"Increases of the weighting of the euro in the twin currency basket, to a level appropriate for the task of exchange rate policy, will take place step-by-step as market players adapt," the statement said.
Analysts said the announcement completed an informal shift started last year, when the Central Bank yielded to market appreciation pressures and abandoned a de facto dollar peg.
The bank said it would continue its "managed" float of the ruble -- jargon for intervention -- to smooth out excessive volatility and maintain stability.
"The main purpose is to get away from the ruble-dollar peg. The Central Bank feel they are forced to intervene on a daily basis and over time that is just not sustainable or very healthy," said Zsolt Papp, economist at ABN AMRO in London.
Papp said the shift was a vital first step to widen and deepen Russia's financial markets and prepare for the planned lifting of capital controls in 2007.
Analysts said questions remained unanswered -- including how far the euro's share of the currency basket may rise in future, and exactly how intervention would work in practice.
"The Central Bank has said 'we are going to spread the volatility between the dollar-ruble and the euro-ruble,'" said Alexei Moisseyev at Renaissance Capital in Moscow. "But questions remain over what levels they are going to target."
Central bankers have said they would like to shift to a 50-50 dollar-euro basket, and Deutsche Bank economist Jens Nystedt said he expected that level to be reached within months.
"The low weighting of the euro is surprisingly cautious," he said.
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