22 Oct 2010 16:13

CBR says balance of payments will stay strong in 2011, pressure ruble

MOSCOW. Oct 22 (Interfax) - The Central Bank of Russia suggest that the country's balance of payments will remain strong into 2011, which could put pressure on the ruble from the standpoint of its strengthening.

"In 2011, the persistence of a strong balance of payments is presupposed. In the basic scenario [of the main directions of monetary-lending policy] there will be both an inflow of capital and a positive current account, that is, there will be pressure on the Russian currency from the standpoint of its strengthening," Director of the CBR's financial market operations department Sergei Shvetsov said during a State Duma committee meeting.

The CBR has mechanisms to counter speculator expectations and keep the exchange rate sufficiently unpredictable, Shvetsov said.

The flow of speculative capital into Russia subsided in the latest six months as the risk on short-term investment in the ruble sharply increased. The ruble has ceased moving in just one direction, although the lack of predictability in the exchange rate has not affected economic activity. The Central Bank will work to ensure the movement of the ruble exchange rate is less predictable in future, by expanding the corridor of the bicurrency basket and by changing the parameters of cumulative interventions that adjust the boundaries of the floating interval.

"Currently the Central Bank is not using quantitative benchmarks for the ruble exchange rate," he said. "The Central Bank is not considering any proposals for constraining capital, but it is not ready to say that it will not use various reserving statutes concerning bank liabilities, in foreign currency and rubles," Shvetsov said.