Russia int’l reserves decline $3.6 billion

Bloomberg

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The value of the reserves shrank to $449.9 billion in the week ended Nov. 21, after plunging $21.9 billion in the previous week, Moscow-based Bank Rossii said in an e-mailed statement yesterday.

The international reserves, the third-biggest after China's and Japan's, have fallen 25 percent from this year's high of $598.1 billion on Aug. 8. The central bank, which buys and sells currency to keep the ruble within a trading band against a dollar-euro basket, spent $57.5 billion to shore it up in September and October, according to Chairman Sergey Ignatiev.

Central bank intervention
The central bank sold as much as $10 billion in foreign currency last week, estimated Anton Struchenevsky, a senior economist at Troika Dialog. The interventions were smaller than in previous weeks because banks bought rubles to make value-added tax, profit and excise-tax payments for their clients over the next few weeks, he said.

"We have amassed sizable reserves which will give us the freedom to maneuver, allow us to maintain ... stability and, therefore, won't allow a spike in inflation or sharp changes in the ruble's exchange rate," Prime Minister Vladimir Putin said on Nov. 20.

China's reserves will "hopefully" reach $2 trillion this year, said Yao Jingyuan, chief economist of the nation's statistics bureau. Record trade surpluses helped to push China's holdings to $1.9 trillion at the end of September, according to the central bank. Russia held 45 percent of its reserves in U.S. dollars, 44 percent in euros, 10 percent in pounds and about 1 percent in yen on Nov. 1, according to the most recent figures.

"The ruble is probably overvalued for the ... conditions that we are going to see over the next few years and needs to come back by 10 to 20 percent in order to give competitiveness back to exports," Gary Dugan, Merrill Lynch & Co.'s chief investment officer, said.