The capital outflow continues in Russia; the amount was at least $3 billion past week.
Photo: Pavel Soloviev
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Money Continued the Westward Flight
The money is flowing out of Russia; the amount was at least $3 billion past week, showed the August 22 estimate of Russia’s foreign reserves that was released by the Central Bank of Russia (CBR). The interbank rates peaked to the August 11 record yesterday on profit tax payments. The problem of liquidity is acute and the RF Finance Ministry and CBR will probably attempt to sort it out also by extending duration of the budget deposits in the banking system.
The RF foreign reserves (former foreign exchange and gold reserves) amounted to $581.5 billion as of August 22, having added no more than $0.4 billion from August 15 to set off the previous week’s decline of $16.4 billion. The capital outflow is the basic reason of this movement.
The week’s outflow could be from $3 billion to $4 billion, said Alexei Moiseev from Renaissance Capital. Some $8 billion to $20 billion flew out of the country August 8 to 15 on military clashes with Georgia.
Although political risks are the key factor fueling the outflow, there are a few other reasons that couldn’t be neglected. Quite a number of loans given to Russia’s companies mature in August; Rosneft alone paid $9 billion to creditors.
The liquidity of banking sector has suffered material decline. As of yesterday, the amount of correspondent accounts of banks and deposits with the CBR was no more than 659.5 billion ruble. Therefore, the interbank rates are high today. One-day MosPrime was 7.92 percent Thursday, although it usually fluctuates from 3 percent to 5 percent. The banks go to the CBR for liquidity at large. One-day turnover of REPO transactions totaled 168 billion ruble.
And last but not least, huge tax payments (due to high prices for crude oil) have collided with capital outflow. According to Renaissance Capital, the severance payments reached 270 billion ruble as of August 25, and from 210 billion ruble to 220 billion ruble was paid as the profit tax yesterday.
www.kommersant.com
All the Article in Russian as of Aug. 29, 2008
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