MOSCOW, June 18 (RIA Novosti) – The Russian government tried on Tuesday to allay market fears that a planned large-scale foreign currency purchase would cause the ruble’s devaluation.
Finance Minister Anton Siluanov on Monday said the ministry would start purchasing foreign currency on the market from August to replenish the country’s reserve funds. This was expected to weaken the ruble by 3-7 percent and stimulate Russia’s faltering growth, he said.
The Russian market reacted nervously to this news. As of 5:46 p.m. Moscow time (1:44 p.m. GMT, the ruble had plunged by 29 kopecks against the dollar on the Moscow Exchange, punching the psychologically important level of 32 rubles to reach 32.03 rubles to the dollar and lost 58 kopecks to the euro to fall to 42.58.
Russian First Deputy Prime Minister Igor Shuvalov tried to calm tensions on the market, saying the move was aimed against the excessive strengthening of the ruble – not at triggering its devaluation.
“Devaluation means a radical change to your foreign trade balance, no [Central] Bank foreign currency intervention takes place and the exchange rate starts to fall. That is not the situation we currently have. Our [foreign] trade balance is still positive,” he said.
Finance Minister Siluanov said that had been agreed by the Finance Ministry and the Central Bank several months ago and the decision “bares no relation to devaluation,” Shuvalov said.
