Official Sees No Ruble Devaluation

The Central Bank has the means to control sharp fluctuations in its currency but does not yet see the need to limit capital movements or change the ruble's trading corridor, two top officials said Saturday.

Alexei Ulyukayev, the Central Bank's first deputy chairman, said such measures would not be necessary because the country's macroeconomic condition remains strong.

"We have a good balance of payments, large reserves and the basic economic indicators are strong," Ulyukayev said in comments on Ekho Moskvy radio.

"Just because the global financial crisis has hit our shores does not mean that the ruble has to be significantly devalued," he added.

Separately, First Deputy Prime Minister Igor Shuvalov said Russia would not allow any drastic volatility in the ruble, which dropped to two-year lows against the dollar last week.

"It's important to understand that the Central Bank has the full arsenal of measures and financial resources not to allow any sharp fluctuations, upward nor downward, in the value of the Russian currency," Shuvalov said on Vesti-24.

"Right now, everyone in the government and the Central Bank believes that sudden changes in the national currency's value is detrimental and must not be allowed by any means," he added.

Ulyukaev said that although capital outflows have continued in October, they would be significantly less severe than last month, when around $25 billion was pumped out of Russia.

"There are going to be outflows, but much less than in September," he said.

Citing preliminary figures, Ulyukaev said the net capital flows were still positive for the first nine months of 2008, with inflows amounting to $800 million between January and the end of September.

By year's end, outflows are expected to reach $20 billion, down from the earlier inflow forecast of $40 billion to $80 billion. Ulyukaev said the Central Bank has informed the banks that it is watching their currency operations closely to monitor the flow of capital.