RUSSIA

Russia spent record US$11.3b in one day defending rouble

PUBLISHED : Wednesday, 05 March, 2014, 10:18pm
UPDATED : Wednesday, 05 March, 2014, 10:18pm
AFP

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Russia sold a record US$11.3 billion in foreign currency to support the rouble when it came under unprecedented pressure due to concerns about conflict in Ukraine, central bank data showed yesterday.

The Russian central bank moved on Monday to prevent the Russian currency from falling further in value, after the market reacted with panic to parliamentary approval for President Vladimir Putin's request to allow military action in Ukraine.

The information was disclosed in the bank's daily release of currency interventions and no further details were given.

But the central bank had indicated on Monday that it was prepared to make major interventions, saying that due to the increased volatility it was assessing the market situation daily.

"This measure was adopted to prevent the risks for financial stability by limiting the rouble exchange rate fluctuations," it said in a statement on Monday.

Russian news agencies said that the amount of foreign currency sold by the central bank was by far the most since records began, beating the previous record from September 2011 by some five times.

Russia's total foreign-currency reserves amounted to US$493.4 billion as of February 21, meaning that the central bank sold just more than 2 per cent of its reserves in one day of trading.

Traders had already said the bank had made colossal interventions on Monday, but this was the first time the bank's own data confirmed the magnitude.

The intervention appears to have been successful, with the rouble rate now stabilising after "Black Monday", when the currency crashed in value and Russian equity markets also tumbled more than 10 per cent.

In early afternoon trade yesterday, the rouble was trading at 36.14 to the US dollar and 49.65 to the euro. At the close of trade in Moscow on Monday, the rouble had been trading at record low values of 36.44 to the dollar and 50.22 to the euro.