Signs are the ruble is appreciating and Russia will continue its position (aside China) as one of the world's top gold buyers and producers
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This article originally appeared in German Economic News. Translated from the German by Paul Dunne
The Ruble has recovered so strongly in the last few months that the Russian Central Bank wants to undertake corrective measures. They are talking about buying gold and foreign exchange.
"We'll see what happens in the market", Reuters reports Central Bank chief Elvira Nabiullina as saying this weekend at the meeting of the World Bank and International Monetary Fund (IMF) in Lima. "If the fluctuations increase, we will evaluate the situation carefully and where possible replenish gold and foreign exchange reserves." To date the reserves total about 370 billion dollars. Earlier statements indicate that Nabiullina is striving for a level of up to 500 billion dollars.
In the trading week just gone, the Russian ruble increased in value against the US dollar as never before this year. This has encouraged speculation that the central bank could use the opportunity to buy foreign currency. It has had many times to intervene in the currency markets this year, selling foreign currency in order to shore up the sharply fallen rouble.
Responding to Russian actions in Ukraine, the EU and the USA imposed economic sanctions against Russia and put difficutlies in the way of Russian access to capital markets. The rouble thereby came under heavy pressure to devalue, especially as the price for oil and gas on the world market sank. Both these raw materials are important Russian exports.
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