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In July, Russia's monetary base decreased by 1.4%, the Central Bank reported yesterday
Such a fall has not been seen in the past eighteen months. Analysts put it down to the banking crisis that pushed many Russians to transfer their deposits into dollars. According to the Central Bank, since March, dollar and euro sales exceeded purchases, but this trend became particularly conspicuous in summer. Some analysts explain this by saying that summer is holiday time, and people cash part of their deposits and transfer them into the currency they need. According to experts, the ruble reduction was also prompted by the sharp decrease in gold and currency reserves in the context of the high July trade balance, which is the main source of money supply in Russia. However, analysts see no reason for panic yet, as the supply is growing in a long term. In the first seven months of 2004, the monetary base increased by 13.1%. The amount of cash went up by 13.1%, and non-cash funds by 12.3%. On the one hand, the growing levels of cash will push up prices, experts say. Few believe today that the 2004 inflation rate will remain within 10%, as the government promised. On the other hand, analysts admit that Russia is short of money. The economy's monetisation (the relation of the monetary base to GDP) will be 28% in 2004, experts claim. In eastern Europe, this figure stands at 60%, and in Switzerland - 115%.
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