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. Last Updated: 07/27/2016

Ignatyev: Enough Reserves to Defend Ruble

The Central Bank warned the market Thursday that it would not hesitate to dip into its growing pile of dollars to prevent any serious fall in the ruble and keep prices in check.

"I believe that the Central Bank has sufficient resources, gold and currency reserves, to offset new emissions, to keep under control the burst in inflation we saw at the beginning of the year," Central Bank chief Sergei Ignatyev told a conference.

Ignatyev, appointed two months ago, was speaking as the Central Bank moved to prevent a rise of the ruble on the foreign exchange market.

Ignatyev said he was ready if necessary to use foreign currency reserves, which rose $600 million to hit a record $40.6 billion, to stop the currency moving too sharply in the opposite direction.

Money supply normally rises at the end of the year when the Finance Ministry completes its budgetary payouts. This January saw consumer prices jump to a three-year peak of 3.1 percent.

"We may deliberately sell off part of our [currency] reserves at the end of the year," Ignatyev said.

Active dollar purchases sent the Central Bank's reserves shooting up by $1.8 billion in the three weeks to May 17 alone, but by printing rubles to buy petrodollars it took a risk of accelerating the inflation rate, one of the country's key economic problems.

Officials put the 2002 annual inflation target at 12 percent to 14 percent, though markets believe these figures are too optimistic. The forecast for next year's inflation has been put at 10 percent to 12 percent.