Putin, Ignatyev Call for Halt to Capital Outflows

Central Bank Chairman Sergei Ignatyev backed Prime Minister Vladimir Putin's call for stricter banking oversight by government, law-enforcement and financial authorities amid capital outflow.

"When there is a significant capital outflow, a more effective, tighter oversight of the situation is needed," Ignatyev said Monday in comments broadcast on Vesti-24. Net private capital outflow reached $50 billion in October, he said, citing preliminary estimates.

Lenders that have received government funds meant to boost liquidity in Russian markets are increasingly transferring money abroad, Putin said during a government meeting Monday, according to Vesti's web site.

He also on Monday warned against "corporate egoism," saying that emergency funding must work "within Russia, as intended," he said, Interfax reported.

The calls came as Ignatyev said Monday that he did not rule out more flexibility in the ruble's trading rate.

The ruble is under pressure from capital outflows, which Ignatyev said had reached a net of $50 billion in October. The Central Bank, which runs a managed float of the currency, has been defending the ruble's exchange rate since August.

"I do not rule out more flexibility in the ruble exchange rate with some tendency toward a weakening of the ruble against some foreign currencies in the current conditions," Ignatyev said.

Central Bank officials until recently maintained that they were not planning to change technical parameters of the ruble's trading band against the basket, made of 0.55 dollars and 0.45 euros.

Ignatyev did not say whether the weakening was possible against the basket as well. The ruble has weakened by 16 percent against the dollar since a July 15 peak, tracking the dollar's surge in the forex market.

The ruble was little changed at 27.043 per dollar late Monday, from 27.030 on Nov. 7. Against the euro, it weakened 0.4 percent to 34.499, from 34.377.

(Bloomberg, Reuters)