Here's the ultimate irony, if you said five years ago the Russia would have intervene to support the USD, you would have been laughed off the planet: Russia "the responsible" inflation fighter.
Russia ready to use reserves to calm rouble-report
Reuters, 02.29.04, 7:47 PM ET
LONDON, March 1 (Reuters) - Russia is prepared to use its foreign-exchange reserves to cushion any upward pressure on the rouble, as it closely watches the U.S. dollar's fall against the euro, the Financial Times reported on Monday.
Oleg Vyugin, the Russian central bank's first deputy chairman, told the paper in an interview that the bank was prepared to act to prevent the currency market from "overheating." Russia has seen strong interest from portfolio investors, lured by its rising markets and economic potential.
"If there is a big flood of portfolio investment into the Russian market, the central bank is ready to use its reserves to sterilise this," Vyugin was quoted as saying.
Russia's gold and foreign-exchange reserves stood at $86.7 billion as of Feb. 20, up $9.8 billion since the start of 2004, thanks largely to high oil and commodities prices, heavy corporate borrowing abroad and more Russians shifting their savings into roubles away from a weak dollar.
That has propelled the rouble to almost three-year highs against the dollar and forced the central bank to contain the rise to help local producers compete with foreign goods.
Vyugin declined to reveal any target rate for the rouble, the paper said, adding the central bank was closely monitoring the dollar. Most of Russia's export revenues are in dollars, while half its imports come from the euro zone.
"If we just followed the dollar rate, we could end up with a jump in inflation," Vyugin added. "At the moment, the dollar/euro exchange rate suits us. But if we move substantially, we may review our forex policy." |
