Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Kudrin Says Reserves Must Be Used Wisely

The country must be cautious in using its foreign exchange reserves, which have already fallen by one-tenth in the last few months, and the emphasis should be put on supporting the ruble, Finance Minister Alexei Kudrin said Tuesday.

The reserves, the world's third largest, are now at $530.6 billion, down $66.9 billion since early August. Credit rating agencies have said Russia's reserves are a key factor in its investment grade rating.

"We need to be careful when we use this stabilizing influence," Kudrin told fellow finance ministers from former Soviet states, referring to the reserves. "Gold and forex reserves allow us to guarantee the currency rate stability," he said. "Currency market speculators will be disappointed."

Reserves have fallen mostly because of heavy intervention by the Central Bank in the past few months. It has managed to keep the ruble stable against the dollar-euro basket at around 30.40.

But as ordinary Russians track their savings through the dollar rate, officials have had to intervene almost daily to persuade the population that the ruble will not weaken. "No ruble devaluation is planned," Sergei Shatalov, a deputy finance minister, said in the Armenian capital of Yerevan, where he was traveling with President Dmitry Medvedev.

Also in Yerevan, Energy Minister Sergei Shmatko said Moscow would cooperate with the Organization of the Petroleum Exporting Countries but that it would not join oil output cuts, despite calls from the producers' organization to help it support flagging oil prices. "We want to have the possibility of having fairly independent policies," he said.

A broadly strong dollar rose against the ruble to 26.57, its highest level since February 2007, while exchange rates on the streets of Moscow were as high as 28.

Traders estimated the Central Bank's currency sales at around $2 billion on Tuesday after no interventions Monday and interventions of $4 billion to $5 billion per day last week.

The reserves are poised to fall by a total of $74 billion in the next few weeks. Russia has earmarked $50 billion to help its companies refinance foreign loans, another $6.7 billion to buy local stocks and $17.3 billion in subordinated loans for the country's largest banks.

The money will mainly flow via Vneshekonombank, also known as the Development Bank. Its head, Vladimir Dmitriyev, said Tuesday that it had already received $97 billion in refinancing applications.

"Banks have applied for twice as much as companies -- $64 billion from the banks and $33 billion from companies," Dmitriyev told reporters, adding that the first 10 applications would be cleared in the near future.

n Kudrin also said Tuesday that the country would issue a $2 billion loan to Belarus and resume common currency negotiations.

"Last week, a decision was taken to grant Belarus a $2 billion loan -- $1 billion will be issued this year and $1 billion next year," Kudrin said, adding that the terms of the loan were still under discussion. "During this time, we decided to draft a joint action plan to create a common currency," Kudrin said.