Tuesday, September 30, 2008

Russia sees reserves tumble during September

MOSCOW, September 30 (RIA Novosti) - The Russian Central Bank's international reserves, which saw strong growth for most of this year, have lost $40 billion in the past few weeks, an analyst at a leading brokerage said on Tuesday.
The international reserves, comprising foreign currency, gold, and a range of other assets, started the year at $478 bln, making strong gains each month to reach $596 bln on August 1, before slipping to $582 bln as of September 1 as the global financial crisis worsened.
"In the past few weeks, with the bankruptcy of Lehman Brothers and other financial institutions, we have seen across-the-board selling of all possible assets, including in Russia... Russia has lost almost $40 billion in gold and currency reserves," Yevgeny Gavrilenkov, chief economist at Troika Dialog, told a RIA Novosti news conference.
He said the loss had largely resulted from a revaluation of the euro- and pound-denominated part of the reserves.
Over the last few days the situation on Russian markets has been somewhat improving, despite the continued share price declines, he said.
The most recent Central Bank data puts the international reserves at $559 billion as of September 19. The bank said on Monday it would grant state-controlled Vnesheconombank $50 billion from the reserves to support the financial system.
Most of the funds will be loaned on to Russian companies to pay down their debt to foreign creditors, which totals around $300 billion, the Central Bank said.
Vnesheconombank (Bank for Development and Foreign Economic Affairs) was established by the Russian government last year as a national development vehicle to modernize and diversify the Russian economy and make it more competitive.
Prime Minister Vladimir Putin said on Monday that Russian companies had encountered problems in obtaining loan extensions or new loans amid global financial woes.
Russian stocks nose-dived on September 17 to their lowest point in nearly three years, and around 60% lower than their May high. The market rebounded on September 19 after the government scrambled to inject billions of dollars into the financial sector to shore up liquidity.
Finance Minister Alexei Kudrin earlier said the government could opt to buy back stock of Russian companies, including those with government interest, if they remained undervalued, spending up to 500 billion rubles ($20 billion).


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