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. Last Updated: 07/27/2016

Central Bank Reserves See Biggest Post-'98 Fall

The country's gold and foreign currency reserves shrank by $1.7 billion in the week to Aug. 22, the largest weekly drop since the 1998 financial crisis, the Central Bank said Thursday.

Economists were anticipating the drop when Russia paid $1.8 billion on its debt to the Paris Club of country creditors and said the Central Bank's reserve growth forecast of $66 billion by the end of 2003 was realistic.

Russia's gold and foreign currency reserves fell to $63 billion as of Aug. 22 from $64.7 billion a week earlier, the Central Bank said in a statement, providing no further comment.

It had said August's bunching of foreign debt payments could shave some $2 billion off its reserves this month when it was selling hard currency to the government to meet its liabilities.

"There was this big debt payment of $1.8 billion which explains the drop and I would not see it as a cause of concern," said Peter Westin, a chief economist at Aton Capital.

Russia has paid foreign creditors $11.7 billion in the first seven months of the year out of a total $17.3 billion falling due in 2003, according to estimates by ING Bank in Moscow.

"We are looking at $1.3 billion foreign debt repayments in September," said David Ross, an analyst at London based consultancy 4cast.

Reserves ballooned to $63 billion from $47.8 billion at the start of the year due to persistent upwards pressure on the ruble driven by high crude prices and heavy corporate borrowing abroad.

The Central Bank has been buying up inflowing oil dollars on the foreign exchange market to keep the ruble's strength in check, pumping more rubles into the financial system and fueling inflation worries.