CBR Deputy Chairman Konstantin Korishchenko, left, and MICEX GD Alexander Potemkin, right
Photo: Mikhail Pochuev
|
 |
Ruble Ready to Pay for Safe Image
Central Bank of Russia, CBR, has resumed efforts to further appreciate the national currency. At the same time, financial authorities of Europe and the United States do utmost to prevent the liquidity crisis, which beginning is more than evident. Given that Russia’s ruble have recently gained another 0.5 percent, the ruble assets could turn into some safe harbor amid the generally unstable markets, at least Credit Suisse forecasted this scenario Thursday. Should it happen, Russia’s economy will welcome new capital inflows, ruble will go through another appreciation and the nation will face inflation above all targets and outlooks.
Yesterday, CBR allowed the ruble to appreciate to bi-currency basket ($0.55 to ˆ0.45) third time this year. Today’s exchange rates are 25.34 ruble/$ and 34.95 ruble/ˆ, and the basket’s cost is 29.67 rubles. The ruble appreciated to the basket 0.3 percent on Thursday separately and 0.5 percent if taken for Wednesday and Thursday on aggregate.
This appreciation of Russia’s currency coincides with a new wave of the global liquidity crisis triggered by subprime mortgage sector problems.
The liquidity crisis has hit the markets of CIS already, but Russia is apparently fit to face global difficulties today. Thanks to the appreciation methods of CBR, the country’s assets look quite attractive to foreign investors. According to Credit Suisse, Russia’s ruble and Brazilian real are the safest assets to wait through forthcoming problems.
Should this recommendation be taken even by the very minimum of free money of the world, Russia would face gigantic flow swamping all existing outlooks.
And last but not least, we have local problems here. The analysts attribute appreciating pains of CBR not to the desire to withstand some global hardship but rather to unfavorable inflation in July, which surged to 0.9 percent, i.e. to 8.8 percent in annual terms, while the annual target is just 8 percent. But if foreigners really start thinking it is safe here, Russia’s economy will welcome new capital inflows, ruble will go through another appreciation and the nation will face inflation above all targets and outlooks.
www.kommersant.com
All the Article in Russian as of Aug. 10, 2007
|
|
|
