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. Last Updated: 07/27/2016

Reserves of $19.9 Bln Keep Ruble Strong




ST. PETERSBURG -- The ruble should be able to hold its own against the dollar as the Central Bank has enough reserves to counter any speculative pressure, Central Bank Chairman Viktor Gerashchenko said Thursday.


Gerashchenko also said the Central Bank might consider cutting its key refinancing rate soon to keep it in line with inflation.


"We can assess the outlook for the foreign exchange market as favorable," Gerashchenko told a banking congress. "The Central Bank has saved enough capital to fend off speculative attacks on the national currency."


The Central Bank said earlier Thursday that its gold and foreign exchange reserves has risen $800 million to $19.9 billion in the week ending June 2.


The ruble has been firming steadily since the start of the year, supported by strong export revenues resulting from high international energy and commodity prices. The Central Bank's official rate for Thursday was set at 28.30 rubles per dollar.


Gerashchenko said export revenues in the near future would not be lower than in April.


Prime Minister Mikhail Kasyanov said last month that further strengthening of the ruble was not in the economy's best interests. But Gerashchenko reiterated that artificial weakening of the ruble against the dollar would not be good for the economy.


"The negative consequences of the national currency's depreciation may be harmful for the social sector, households ? and servicing foreign debt," he said.


Gerashchenko said the Central Bank board might meet next week to consider cutting the refinancing rate, cut to 33 percent from 38 percent March 21.


"I think we will hold a board meeting after June 12," Gerashchenko told journalists when asked when the Central Bank planned to cut the refinancing rate.


Gerashchenko said the rate would move in line with inflation, which the government estimates will be 16 percent this year. Some analysts have forecast 2000 inflation at 10 percent to 12 percent after last year's 36.5 percent.


Inflation totaled 6.8 percent in the first five months of the year, according to the Russian Statistics Agency, Prime-Tass reported Thursday.


Commercial banks seldom borrow from the Central Bank at its refinancing rate, but its movements serve as a guideline in setting their lending rates.


The refinancing rate is widely regarded as a major signal used by the Central Bank to indicate its overall monetary stance. It is also seen as cap for yields on the domestic government debt market.


Another rate cut would show the bank's desire to boost industry lending, a priority of President Vladimir Putin.