New Influx of Capital Expected

The Central Bank said Tuesday that it expected net capital inflows to resume shortly and amount to $35 billion this year and that it still hoped to keep inflation to single digits in 2008.

Record capital inflows into Russia of more than $80 billion in 2007, which arose from high prices for Russia's main export commodities and heavy corporate borrowings, were one reason for the failure to meet inflation targets.

Consumer prices rose 11.9 percent in 2007, significantly exceeding the government target of around 8 percent.

Inflation is running at 13 percent in the first quarter, year on year, despite outflows of $22.8 billion amid global market jitters, but Central Bank first deputy head Alexei Ulyukayev said he expected price rises to slow down.

"As of today we are seeing a global inflation acceleration and acceleration in Russian inflation," he told a conference in Moscow.

"However, we expect inflation to significantly drop by a few percentage points versus last year ... to below 10 percent," he said.

n The State Nanotechnology Corporation and the Housing Fund will invest some available cash in Russian securities, Interfax reported, citing a Finance Ministry official.

Channeling these resources into ruble-denominated assets may boost the inflation level by 1 to 1.5 percentage points, said Alexei Savatyugin, director of the Finance Ministry's financial policy department.

Reuters, Bloomberg