Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Ruble Poised to Fall, Former Banker Says




The ruble was steady against the U.S. dollar Tuesday, but a former Central Bank official said it could fall at any time.


"[The ruble] can explode any moment - in a week, in a month, in a year," Sergei Alexashenko, former first deputy chairman of the Central Bank and now head of the Center for Development think tank, was quoted as saying by Moscow News weekly.


The ruble averaged 24.2209 per dollar on the Moscow Interbank Currency Exchange after Monday's 24.2248.


Based on results of the unified trading session on the SELT electronic system of MICEX, the Central Bank set its official rate for Wednesday at 24.22 per dollar, unchanged from Tuesday's rate.


The official ruble rate has been steadily edging up every trading day since July 7. But currency traders said it was nearing a peak.


"The Central Bank has thrown a lot of support behind the ruble in the time since restricted trade was ended to make sure it didn't plunge ... But now we've gone up about as far as the market will tolerate," said one Russian trader.


Alexashenko said the increasing volume of unbacked money released by the Central Bank was behind the danger.


He said the Central Bank had bought about $6 billion on the foreign exchange market since last September issuing about 120 billion rubles.


However, the dollars did not go to the bank's assets, but were transferred to the Finance Ministry to pay foreign debt.


He also said the Central Bank had released more than 25 billion rubles of credits to banks damaged by last year's crisis and more than 50 billion rubles of ruble-denominated credits to the Finance Ministry.


But very few people want the ruble: consumer prices are steady, economic growth is only noticeable if compared with last year's crash, while a significant portion of the economy is based on barter, Alexashenko said.


Volume in Tuesday's unified trading session, where rubles for Tuesday settlement are traded by eight exchanges throughout Russia, was reduced at $179.29 million after a previous $200.12 million.


By midafternoon, rubles for Wednesday settlement on SELT were quoted at 24.2700/24.2851 per dollar after a previous average of 24.2467. Spot rubles, for day-after-next settlement, were at 24.2600/24.5000. No spot deals were struck Monday.