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. Last Updated: 07/27/2016

Putin Blames Central Bank For Printing Excess Rubles




Inflation in June may reach 2.5 percent as an export boom has led the Central Bank to print too many rubles, President Vladimir Putin said Monday.


Putin's forecast would work out to an annualized rate of 34.5 percent, well above the 18 percent expected by government forecasters and written into the 2000 budget.


The Central Bank requires exporters to sell 75 percent of their foreign-currency earnings for rubles. The purchases have allowed the Central Bank to raise its reserves to $20.5 billion.


But if the bank is printing rubles to pay exporters, that could cause higher consumer inflation inside Russia, experts say.


If Putin's estimate is confirmed, June will mark the third successive monthly rise in inflation this year. Prices rose 1.8 percent in May and 0.9 percent in April after reaching a low this year of 0.6 percent in March.


"The money supply is larger than the amount the economy can use,'' Putin said at a Kremlin meeting with Prime Minister Mikhail Kasyanov and Central Bank Chairman Viktor Gerashchenko, Interfax reported.


"If this process continues further, then each citizen can really feel [its] negative results,'' Putin said.


Russia's economy has been growing over the past months, with gross domestic product rising at an annual rate of 8.4 percent in the first quarter of this year, compared with a 2.7 percent decline over the same period of 1999.


Because of high Central Bank reserves, the ruble-to-dollar exchange rate has moved slowly in the opposite direction. The ruble reached a five-month high Monday of 28.03 to the dollar, from a low of 29 to the dollar recorded Jan. 11.


High world market prices for oil and gas have also produced a trade surplus of $26.1 billion in the first five months of this year. Russia's trade surplus was only $11.9 billion a year earlier.


Russia's 2000 budget is also turning surpluses month after month thanks to strong exports.