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. Last Updated: 07/27/2016

Official Sees Balance Of Forces on Ruble

There is currently a balance of forces on the country's currency market, Central Bank Deputy Chairman Konstantin Korishchenko, said Wednesday, a day after the Central Bank intervened to support the ruble.

"The state of the current account works toward the strengthening of the ruble, the state of the capital account weakens the ruble. We now have a balance on the market, which can change," Korishchenko said.

He declined to comment on the Central Bank's intervention policy. Traders said the Central Bank sold $2 billion to $3 billion Tuesday to support the ruble for the first time in years.

The ruble lost about half a percent on Tuesday against the dollar and euro currency basket targeted by the Central Bank, as foreign investors battered by the U.S. subprime mortgage crisis sold off ruble assets. It regained 0.2 percent Wednesday versus the basket, composed of 55 cents and 45 euro cents, bringing its net gain for the year to 0.9 percent.

Upward pressure on the ruble from energy export revenues was augmented by record capital inflows in the first half of the year as firms went on a fundraising spree abroad.

"Now the situation has changed because of crisis events not linked to Russia, international players are trying to repatriate their liquidity," Korishchenko said.

Despite the latest capital outflows, the current account surplus remained strong with no hint of international oil prices falling anytime soon, although it was also weakening due to rapidly rising imports. Many exporters were holding back foreign currency revenues from the market due to current volatility, however, contributing to a liquidity shortage on the money market in recent days, market watchers say.

The Central Bank injected 68.13 billion rubles ($2.64 billion) into the banking system Wednesday at a rate of 6.05 percent in its first one-day repo auction of the day.

On Tuesday, the Central Bank pumped 87.8 billion rubles of liquidity into the system at two repo auctions, seeking to offset a spike in money market rates triggered by a sell-off on world credit and stock markets last week.