MOSCOW, January 27. /ITAR-TASS/. Bank of Russia (CBR) will be unable to go ahead with its policy of weakening the ruble for too long by refinancing banks amid increasing expectations of the ruble’s devaluation, Sberbank Investment Research analysts believe.
According to Yevgeny Gavrilenkov, Anton Struchenevsky and Sergey Konygin, the ruble went up 2.8% versus the dollar last week, while the bi-currency basket added 3.3% hitting a five-year high. In contrast to the early 2009 ruble decline, the current weakening is underway amid high oil prices. The CBR’s actions, the experts believe, lead to further ruble weakening.
“Lavish injections of ruble liquidity, undoubtedly, contributed to the ruble’s weakening last week,” the analysts believe.
The CBR increased the refinancing of banks by 282 billion rubles ($8.1 billion), while the Finance Ministry placed 70 billion rubles ($2.1 billion) on deposits. Yet “sooner or later the CBR will have to break this vicious circle”, goes the report, as “devaluation expectations amid ruble liquidity infusions merely cause the ruble to get weaker and foment devaluation fears”.