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Russia's gold and foreign exchange reserves increased by $1.8 billion, to amount to $100.1
From October 8 to 15, the volume of Russia's gold and foreign exchange reserves increased by $1.8 billion, to amount to $100.1 billion as of October 15. The Central Bank's reserves have been increasing for the seventh week in a row. From the start of this year, they increased by $23 billion. According to the forecast made by Sergei Ignatyev, the Central Bank's chairman, Russia's gold and foreign exchange reserves should have exceeded the $100 billion level only by the end of this year. Stanislav Kleshchev from the Financial Bridge investment company believes that "in all probability, no change can be expected in the near future in the tendency for building up Russia's gold and foreign exchange reserves. In his opinion, record raw materials prices coupled with the intention to limit the strengthening of the real rouble exchange rate "make the Central Bank print more roubles in order to buy out the increasing influx of petrodollars." Kleshchev pointed out that in terms of the volume of its gold and foreign exchange reserves Russia holds the eighth place in the world outpacing such countries as Germany and the United States. Only China, Japan and new industrialised Asian countries have great amounts of gold and foreign exchange reserves. Kleshchev noted that an increase in Russia's gold and foreign exchange reserves made Russia more attractive to investors, but an increase in these reserves over and above the optimal level could be sooner regarded as a drawback of the national economy. In the expert's opinion, the necessary amount of Russia's gold and foreign exchange reserves allowing it to meet its earlier debt obligations and continuously engage in foreign trade transactions equals $48 billion. Kleshchev doubts the expediency of having such huge reserves - in excess of $100 billion. "The only goal pursued by the Central Bank in building up Russia's gold and foreign exchange reserves is to prevent the excessive strengthening of the rouble resulting in a fall in domestic commodity producers' competitiveness," Kleshchev stated. Valery Vaisberg, analyst with the Region investment company, believes that in conditions of high oil prices and the continuing inflow of rather big amounts of foreign exchange earnings, it was more and more difficult for the Central Bank to prevent the rouble from getting stronger. In addition, the strengthening of the euro on the international financial market adds pressure on the dollar's position on the Russian market. "This is the result of the US election campaign," Vaisberg says. "In the event of Bush's victory which, judging by recent forecasts, is more realistic than Kerry's victory, the dollar exchange rate will fall because the US administration's policy is aimed at increasing the United States' trade deficit. Should Kerry win, the dollar will stabilise on the world market which will also have an effect on the Central Bank's policy." In Vaisberg's opinion, the rapid growth in Russia's gold and foreign exchange reserves could only be restrained by an increasing capital flight from Russia against the pessimistic background of the Yukos case and forthcoming foreign debt payments at the end of this year. Nevertheless, against the background of an increase in gold and foreign exchange reserves, the yearly inflation rate for 2004 will hardly stop at the 10% level. In Vaisberg's opinion, "all estimates show that the inflation level will be higher." "Until a principled decision is taken to admit foreigners to the country's banking system and Russian major banks are privatised, the Central Bank will be torn between the two absolutely opposite tasks - not to permit the real strengthening of the rouble and to combat inflation," says Kleshchev. In his words, "Russia's growing gold and foreign exchange reserves will be the most vivid symbol of the banking sector's unresolved problems."
Print Russia's gold and foreign exchange reserves increased by $1.8 billion, to amount to $100.1 Bookmark Russia's gold and foreign exchange reserves increased by $1.8 billion, to amount to $100.1

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