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Central Bank Prepares for the Worst
Deputy Prime Minister Alexey Kudrin has told Russian President Vladimir Putin that the Central Bank and Finance Ministry are prepared to release addition liquidity onto the market, including budget funds earmarked for the capital of state corporations. Monetary intervention is contradicts anti-inflationary measures, but the Finance Ministry sees the threat from the crisis in liquidity as more serious.
Kudrin explained at the government meeting with the president yesterday that the Central Bank has sufficient funds for an intervention on the domestic money market. He added that the Finance Ministry is able to place the funds intended for the capital of state corporations into the Russian banking system. That would be an injection of about $9 billion. In addition, more government spending takes place at the end of the year than at the beginning, which promises at least another 200-250 billion rubles ($8-10 billion) to reach the market.
Kudrin did not specify what risks require such gargantuan injections of capital. Analysts confirm that the liquidity crisis is continuing and may worsen this month. The Central Bank provided 85.7 billion rubles in liquidity at yesterday's repo auction. That sum is far below the record amount of 243 billion rubles on August 28, but exceeds the September high mark of 55 billion rubles.
www.kommersant.com
All the Article in Russian as of Oct. 09, 2007
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