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Russian chief banker says rouble may fall further but not as fast

June 02, 2012, 20:06 UTC+3

The bank is already responding to the situation

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GORKI, June 2 (Itar-Tass) —— Central Bank Chairman Sergei Ignatyev said the rouble might continue to fall further if oil prices keep going down, but not as fast as it has over the past several weeks.

“If the price if oil stops falling, the rouble will most likely strengthen. If the price of oil continues to fall, the rouble will grow weaker, even though not necessarily, but slower than before because we will use currency interventions much more actively,” Ignatyev said

The bank is already responding to the situation. “The bi-currency basket has come closer to the ceiling, i.e., it has come into the area where we actively use currency interventions. We tried 200 million U.S. dollars yesterday, and the situation is generally under control,” he said.

He believes that the main reason for the rapid fall of the rouble is the deterioration of the economic crisis in Europe, a resulting drop in prices for resources, including, oil, and expectations of negative trends in Russia’s balance of payments.

Prime Minister Dmitry Medvedev instructed the Central Bank to continue to main macroeconomic stability in the country, including by way of interventions in the currency market.

“There can be different emotions of course, but there are rules and the Central Bank must abide by them, including with regard to the currency band, stepping up interventions, while watching the overall macroeconomic situation, naturally, European trend and resource trends,” Medvedev said at a meeting on Saturday, June 2, that focused on the state of financial markets and the impact of the global financial market on the Russian economy.

The prime minister noted that the causes of the current situation in the global financial system are known and are largely connected with the processed taking place in Europe.

“Our task is the same – to watch the current situation calmly and, wherever necessary, correct certain proportions in our financial system, taking guidance mainly from the approaches that were worked out during the global financial crisis and after it,” he said.

Medvedev recalled that there is a set of tools and criteria for that, which the Central Bank has to use as the main regulator of financial activities in Russia.

At the beginning of the meeting, Medvedev asked Ignatyev to speak about how the current situation impacts the Russian economy and about the measures the Central Bank “has taken and will take in order to maintain macroeconomic stability”.

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