Appreciation of the U.S. dollar and of dollar assets widened Russia’s gold and forex reserves by $5 billion by November 28, 2008.
Photo: Denis Kurilenko
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CBR Won Back Forex Reserves
After weeks of shedding foreign exchange assets of the government, the Central Bank of Russia has managed to report their growth. The appreciation of the U.S. dollar and of dollar assets widened Russia’s gold and forex reserves by $5 billion by November 28 despite the new surge in demand for foreign currency. The year-end amount of government’s stockpile depends on the ruble depreciation rates. In Merrill Lynch, they expect the CBR to gradually reduce the rate to 35 rubles for a basket, and the pace of that reduction will be slower than in November.
After the past week’s fall to $449.9 billion, Russia’s forex reserves widened by $5 billion to $454.9 billion November 21 to 28. The growth was registered in time of the peaking tax payments that usually results in the mass reflow of foreign currency to Russia and eases the pressure on reserves.
On the other hand, the CBR again manifested November 24 the policy of ruble’s controlled depreciation to the basket of $0.55+ˆ0.45, supporting it at 31.3 rubles vs the 31.0 rubles. In another effort, the CBR stepped up the refinancing rate by 1 percent. The bank applied similar measures November 11, which cost $22 billion to the foreign exchange assets of the government.
The third factor that widened the nominal worth of forex reserves was the dollar’s appreciation to euro and English pound.
The analysts differ in their comments. But one thing is clear – the recent round of controlled devaluation hasn’t incurred any serious consequences. The situation in the banking system is close to complete stabilization, CBR CEO Sergei Ignatiev announced before the release of the forex reserves data. The capital outflow (the balance was zero by the start of Q4) is estimated at between $65 billion and $75 billion for this year. In the Bank of Moscow, they say the net outflow was $66 billion to $67 billion as of November 28.
But the data on foreign exchange demand by the population isn’t available yet, and this factor is probably even of greater significance than the capital outflow, which the CBR and the government appear resolved to confront by all means available.
www.kommersant.com
All the Article in Russian as of Dec. 05, 2008
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