4 Jun 2010 18:07

Central Bank could scale forex interventions down due to narrowing trade surplus

MOSCOW. June 4 (Interfax) - The Central Bank of Russia could scale planned forex market interventions down as the trade surplus narrows, CB First Deputy Chairman Alexei Ulyukayev told reporters.

"A narrower trade surplus is reason to think about scaling down interventions," Ulyukayev said.

Things are changing with the balance of payments right now, he said, and a period of rising commodities prices is ending, and physical export volumes are unlikely to increase, Ulyukayev told Interfax this week. On the other hand, imports are growing at a rather rapid rate. In this light, the positive trade balance will contract and be smaller in the second quarter than in the first, he said.

"In this situation the period is ending or has ended when there is a clear overhang of excess forex offers over demand for it. It will change to a situation of excess now and shortage then. This means the ruble exchange rate will be more volatile, and there will be no clear trend either toward strengthening or toward weakening," Ulyukayev said.

The CB started to scale net dollar purchases down as early as April: those purchases totaled $11.337 billion, a 21.7% decrease from $14.484 billion in March 2010.Net euro purchases fell to EUR 412 million in April, from EUR 443 million in March. The CB said $4.173 billion of the dollar purchases and EUR 170 million of the euro purchases were planned.

The CB conducts planned currency purchases as part of its bid to move towards inflation targeting, and only if currency supply exceeds demand.