Recently, speaking at a banking conference in St Petersburg, Elvira Nabiullina, head of the Central Bank of Russia outlined the CBR position on foreign exchange reserves. Nabiullina note that Russian reserves are large - sufficient to cover almost 11 months of imports. However, Nabiullina's 'comfort zone' target for the reserves to cover 2-3 years of "substantial capital outflows", implying she would like to see Russian reserves rising back to USD500 billion mark. Nabiullina is now targeting purchases of forex over the next few years to drive up reserves and to that objective she has been buying on average USD200mln worth of forex per day since mid-May.
In line with forex reserves rebuilding objective, Nabiullina cautioned about markets expectations of further large scale cuts to interest rates as the CBR is trying to balance out inflation targeting (requiring tighter monetary policy), investment supports (requiring looser policy) and accumulation of reserves (implying looser policy).
Per Nabiullina: "Attempts to reduce the interest rates too fast or even acquire certain assets may simply lead to stronger inflation, to an outflow of capital or to dollarisation of the economy, and that would slow down the economic growth, other than promote it."....True Economics
Russian Central Bank Targets Rebuilding of Foreign Reserves
Constantin Gurdgiev
2 comments:
Idiots. This is the correct alternative:
http://www.3spoken.co.uk/2014/12/russian-roulette.html?m=0
They also need to implement rationing. The UK successfully did that from World War II to the 1950s.
We should get this individual as manager of the England Football team. She'd be perfect since she's an expert at continuing to use obsolete tactics and then wondering why things don't turn out as expected.
On the plus side Russia can't get up a head of steam operating like this.
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