Friday, August 18, 2006


Russian Reserves Hit All-Time High

The Moscow Times has this report on Russia's currency. "The country's gold and foreign exchange reserves jumped by a record $10.1 billion in the week ending Aug. 11 as analysts said the Central Bank faced increased pressure from traders betting on ruble appreciation. The jump in reserves beat the previous weekly record of $9.6 billion, set in January 2005, and took the reserves to $277 billion, also a record, further strengthening Russia's position as the world's third-largest holder of reserves, after China and Japan."

"'The biggest part in this increase is the money from last Thursday's session,' said Nikolai Kashcheyev, chief analyst at Vneshtorgbank's treasury department."

"Ruble-dollar trade hit an all-time high of $7.7 billion on Aug. 10 as traders sold the greenback on expectations of a further ruble rise following higher-than-expected July inflation. 'High inflation figures for July became the main impulse and have only strengthened peoples' perceptions that the Central Bank would be forced to let the ruble appreciate,' said Vladimir Pantyushin of Renaissance Capital."

"The ruble has effectively appreciated by 7.9 percent so far this year against a currency basket, compared with a government target of 9.0 percent for the whole of 2006. The Central Bank has vowed to defend the ruble exchange rate and has said it has enough forex reserves to withstand any speculative attack on the ruble."

"On the technical side, the reserves may decline in the following weeks, as Russia has to pay over $20 billion to the Paris Club of creditors as part of its early redemption deal. But Vneshtorgbank's Kashcheyev said he believed further attacks on the ruble-dollar rate were inevitable, given that Russia made the ruble fully convertible in July."

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