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Russian fundamentals seen keeping rouble stable
By Julie Tolkacheva

MOSCOW, Dec 4 (Reuters) - Pressure on the rouble has strengthened recently and the central bank is intervening heavily, but strong fundamentals will keep the currency relatively stable, analysts said on Tuesday.

Seasonal expectations of a weaker rouble and higher consumer price inflation have added pressure on the currency, which the government has allowed to depreciate in nominal terms in 2001.

This has led to the central bank spending $800 million in the last eight days to prop the rouble up, according to dealers' estimates.

But analysts said there was no resemblance to August 1998, when Russia devalued in the wake of an economic crisis.

"I do not see any devaluation situation. There is no basis for a devaluation both from the point of view of the central bank's reserves and from the point of view of stabilised prices for oil," said one Western analyst.

The books look healthier now. In 1998 Russia's current account deficit was $5.5 billion but now it has a surplus of $28 billion. The price of oil at the time of the crisis was under $10 a barrel, versus around $18-$19 in the last few weeks.

Central bank first deputy head Tatyana Paramonova, asked by how much the currency would fluctuate by the end of the year, told reporters, "I do not know how much it will be, but the trend we have now will continue."

Dealers said the central bank's interventions had allowed it to brake any sharp fall in the rouble and stick to its slow depreciation policy.

The central bank set its official rate for December 5 at 29.93 roubles per dollar compared with 29.45 at the start of September. Analysts forecast the rouble would end the year at 30.20-30.50 per dollar.


Dealers said the pressure on the rouble was partly psychological and connected to weaker world oil prices.

It was also seasonal. The rouble usually weakens towards the end of the year, as retail firms, which account for a large portion of the currency market, need hard currency to import goods for New Year and Christmas gifts.

"Now people are buying (dollars from the central bank) every day," the Western analyst said. "In the past, there were occasions when people bought $500 million or more a day. I do not see anything worrying."

Oxana Osipova, an analyst with the Centre for Development think tank, pointed to Russia's healthy budget, which had plentiful reserves for paying foreign debts -- something which had pressured the rouble heavily in the past.

"We shall have enough budget funds to service our foreign debt for a year or a year and a half under any circumstances," she said. "It means there should not be pressure on the rouble."


Central bank reserves edged up to $38.5 billion on November 23 from $38.3 billion the previous week despite the interventions.

Many Russian exporting companies, which have to repatriate half of their foreign currency revenues, do so directly through the central bank, said Alexei Moiseyev, an analyst at Renaissance Capital.

He estimated the daily inflow of export returns at $280 million, while the currency market volume was $100-150 million.

"I will only believe in a rouble devaluation when central bank reserves fall for two to three months in a row as this would mean that serious processes were going on, which give fundamental reasons for a devaluation," he said.

Analysts said sagging prices for oil had so far failed to impact the rouble other than psychologically, as there was a two month lag between price changes and any cut in currency inflow.

But Osipova said that if the oil price fell to $15 per barrel from the current $19 per barrel, there could be a need for a quicker depreciation of the rouble, about 10-15 percent throughout the year, compared with eight percent this year.

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