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UPDATE 2-Pressure on rouble easing, outflows cease-officials

Published 02/26/2009, 12:00 PM
Updated 02/26/2009, 12:08 PM
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(Adds Ulyukayev quotes, background)

By Dmitry Sergeyev and Yelena Fabrichnaya

MOSCOW, Feb 26 (Reuters) - Capital stopped flowing out of Russia in net terms in February and pressure for the rouble to weaken further is easing, top government and central bank officials said on Thursday.

The central bank announced an end to the gradual rouble devaluation policy on Jan. 22, after the currency had lost a quarter of its value against the dollar/euro basket, saying it would defend the rouble at a level of 41 to the basket.

"There are practically no outflows now," Finance Minister Alexei Kudrin said a a meeting of tax service officials. He said in January Russia saw outflows of $40 billion.

First Deputy Chairman of the central bank Alexei Ulyukayev said growth in foreign currency deposits had stabilised at 32 percent of the total, suggesting there was no more flight from the rouble.

"The profitable business on devaluation expectations is disappearing," Ulyukayev said.

Kudrin had earlier forecast capital outflows to hit $100 billion in 2009 against $130 billion last year. Outflows include foreign currency purchases by local banks and firms, a lucrative business during the weeks of gradual devaluation.

Kudrin said Russian oil firms, which have been lobbying hard for new tax breaks to help them cope with falling oil prices, will "earn" about 800 billion roubles ($22.38 billion) as a result of the devaluation. The rouble strengthened slightly on Thursday, helped by monthly corporate tax payments, which boost demand for roubles, and higher prices for oil, Russia's main commodity. The rouble traded at 40.07 to the basket at 1610 GMT.

Russian reserves, down by about $90 billion since the rouble began to fall in November, fell by about another $4.7 billion in the latest week to $381.9 billion.

The central bank said it had sold $40 billion from its reserves to smooth the rouble's slide in January but added that only 17 percent of this amount had physically left the country.

Russian commercial banks have accumulated about $80 billion in foreign currency, according to Kudrin, which should help them and their clients repay foreign debts. They keep about half of the amount in interest-free accounts at the central bank.

Ulyukayev said the central bank would stick to its forecast of 13 percent inflation in 2009 despite the government upping its forecast to 14 percent. He said about half of the inflation would be a result of the rouble's devaluation. (Writing by Gleb Bryanski; editing by Patrick Graham)

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