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. Last Updated: 07/27/2016

Ignatyev: $9Bln Will Leave Russia in '05

VedomostiCentral Bank Chief Sergei Ignatyev
ST. PETERSBURG -- Russia is expected to see a $9 billion net capital outflow in 2005 despite a recent flood of hot money into the country in apparent anticipation of ruble strengthening, Central Bank chief Sergei Ignatyev said Thursday.

"Recently we have observed an inflow of short-term capital through the banking sector. It's possible there is an expectation of a strengthening of the ruble's nominal exchange rate," Ignatyev said at a news conference.

Ignatyev said he was not revising his forecast of a $9 billion capital outflow for the whole year. Last year's net outflow was $9.3 billion.

"Quarterly indicators are very volatile. This is linked to many factors, including changing expectations in relation to the ruble's exchange rate. This is a normal process," he said.

The Central Bank earlier reported that private capital inflows totalled $2.9 billion in the third quarter of 2005 after a $5.3 billion outflow in the second quarter and compared with a $7.1 billion outflow in the third quarter of 2004.

Ignatyev also said the introduction of a dual currency basket in February was having a dampening effect on ruble volatility.

Ignatyev said that he did not expect increased government expenditure in next year's budget to ignite inflation, which he forecast at no more than 11 percent in 2005 and no higher than 8.5 percent next year.

He said that although the government could not exert any influence on oil prices it could try to rein in the resulting inflation.

"We cannot influence oil prices, we can act against inflationary pressures, which appear in relation to the increase in oil prices," he said.