Russia's fx/gold reserves up by USD 3.6bn in week to June 14, RUB still weak

By bne IntelliNews June 21, 2013

The gold and foreign exchange reserves of the central bank increased by USD 3.6bn (0.7% w/w) to USD 519.4bn. The reserves have been fluctuating around a nine-month low since mid-May. In the last two weeks of May, a slight increase in the reserves was reported due to gains on currency swap operations and positive revaluation of gold assets. Analysts surveyed by Reuters attributed the increase of the reserves in the reporting week ending June 14 to positive revaluation of EUR in the fx assets.

According to data by the Central Bank of Russia (CBR), fx/gold reserves declined by 2.8% m/m (USD 14.787bn) to USD 518.431bn at end-May 2013. In ytd terms they declined by 3.57% or USD 19.157bn, up from .82% as of end of April. Russia's fx/gold reserves increased by 1.57%  y/y in May.

In the week to June 14, the RUB/USD rate was set at RUB 32.32 on June 11 and was later raised to RUB 32.35 on June 14. The exchange rate closed the week at RUB 31.80 on June 15. The RUB/EUR rate was set at RUB 42.64 on June 11, RUB 43.24 on June 14 and down to RUB 42.44 on the closing June 15. On the closing date of June 15 bi-currency basket (0.55 USD and 0.45 EUR) thus amounted to RUB 36.59 (moderating from RUB 36.96 as of the end of the previous week). At the same time it was still almost RUB 1 above the upper band of the exchange rate corridor for the basket (RUB 35.65).

According to a report by Reuters, on Thursday June 20, the ruble was traded on MICEX by the end of the session at RUB 37.47 to the bi-currency basket, cost of the basket increasing by 22 kopek as compared to the middle of the week. This makes the weakest RUB since the beginning of the year.

This week the ruble weakened mostly due to finance minister Anton Siluanov reminding investors that they will start acquiring foreign currency on the market for the Reserve and National Welfare Funds. While this was known since the beginning of 2013, Siluanov said that it “wouldn’t be a problem to devaluate the RUB by about RUB 1-RUB 2”, which had an immediate negative effect on the currency. Government’s and central bank’s officials rushed to downplay the damage stating Siluanov’s statements were misinterpreted and ensuring that RUB devaluation this year was not an official policy. 

This week (data available until mid-day June 20) the banks raised RUB 1.16tn in one-day REPO auctions from CBR (two auctions a day) vs. RUB 1.075bn for June 10-June 14. 

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