Russians to Keep Dollars
March 10, 2003
Finance Minister Alexei Kudrin urged citizens not to worry about the recent decline of the U.S. dollar, telling them in a televised interview Sunday that it is not necessary to shift their savings out of the American currency because it will not fall dramatically.
"The dollar is after all the main currency in the world, and the American economy is the largest -- a third of the world economy," Kudrin, who is also a deputy prime minister, told Rossia television.
"So there will be no dramatic fall of the dollar," he said.
Because of the instability of the ruble since the Soviet collapse, most Russians keep their savings in dollars.
But the dollar has lost ground lately against the euro and even against the ruble, leaving many increasingly nervous about the practice. Some have already shifted to euros.
"We can of course talk about some speculative fluctuation, but I would calm everyone. The dollar will not fall dramatically, and to run away from investment in dollars is not necessary," Kudrin said -- though he did not neglect to mention the recent strength of the ruble against the dollar.
The euro has risen steadily against the dollar for the past year and hit its highest point in nearly four years Friday, reaching $1.1064 in trading in Frankfurt.
Russia is the biggest dollar economy outside of the United States, and by some estimates its citizens have tucked away as much as $40 billion in mattresses, closets and shoeboxes.
The government is also heavily dollar-dependent, with most of its hard currency reserves held in dollars and the ruble unofficially pegged to the dollar.
Sunday's interview on a weekly program aimed to reach a wide audience marked at least the second time this year he has sought to ease concerns about the dollar's fall. In early February, he said it should not cause any significant harm to the economy.
The ruble extended its gains against the dollar on Friday after the Central Bank stopped soaking up extra dollars and dealers expected fresh oil revenue receipts to push it higher this week.
The currency rose 2.72 kopeks in official early trade to a weighted average for settlement today of 31.5619 to the dollar from 31.5891 on Thursday, when it nudged higher by a third of a kopek.
The Central Bank wants to contain the real appreciation of the ruble against the euro and the dollar basket at less than 6 percent this year.
Dealers said the ruble might rise further when the market reopens on Tuesday after a three-day holiday weekend, as firms may launch fresh dollar sales to accumulate enough rubles to pay excise and value added taxes due in the middle of March. |
