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WRAPUP 1-Reuters Summit-Russia c.bank sees stable FX, reserves

Published 09/11/2009, 12:28 PM
Updated 09/11/2009, 12:30 PM
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* Russia c.bank sees no reason for big rouble move

* Capital outflows to slow in 2010: Ulyukayev

* Scope for another 100 bps of rate cuts this year

By Lidia Kelly, Toni Vorobyova and Yelena Fabrichnaya

MOSCOW, Sept 11 (Reuters) - Russia's rouble should remain broadly stable for the rest of the year, central banker Alexei Ulyukayev told Reuters on Friday, and there could be scope for up to 1 percentage point in further economy-boosting rate cuts.

Some investors had been expecting a second wave of rouble weakness this autumn after Russia spent some $200 billion of its reserves on a controlled devaluation in late 2008-early 2009.

"Small fluctuations from the current rate are possible by the end of the year, which could be measured in 10s of kopecks in one or other direction," Ulyukayev, one of the bank's three first deputy chairmen, said in an interview at the Reuters Russia Investment Summit.

"I do not see reasons for big fluctuations."

Prime Minister Vladimir Putin said on Friday that the authorities would not allow excessive strengthening of the rouble. Ulyukayev said the central bank's plans for allowing the rouble to float freely had already "virtually" happened.

The rouble on Friday hit a six-week high of 36.98 against the euro-dollar basket the central bank uses to fix the currency's daily exchange rate.

Ulyukayev also said that this year's net capital outflow should be around $40 billion, adding that in 2010 "there will be an insignificant outflow, smaller than this year". The rouble was hit hard in late 2008 when investors fled to safer havens and Russia's oil and commodity exports plunged.

Russia's gold and foreign currency reserves -- the world's third largest -- should remain at the current level of around $400 billion by year-end, he said.

The cash pile is currently held in 47 percent in dollars, around 40 percent in euro and 10 percent in sterling, but in the future Russia would like to add another two or three currencies.

"The investment in U.S. Treasuries is quite high and is not decreasing, it is over a third," Ulyukayev said.

RATE CUTS EYED

The central bank is set to continue with its policy of monetary easing after cutting the benchmark refinancing by 225 basis points since April to 10.75 percent as it seeks to help the economy out of its first recession in a decade.

"There is a theoretical possibility to lower rates by another 1 percentage point by the end of the year," Ulyukayev said. Analysts polled by Reuters expect at least another 50 basis points in cuts this year.

Investors have been on tenterhooks for another cut since Ulyukayev said mid-August a move could be expected "any day". He repeated that phrase on Friday.

Expectations of an imminent cut intensified last week, when data showed inflation at a 4-year low in August.

Russia's central bank does not usually pre-announce the dates of its rate decisions. Ulyukayev said a board meeting was scheduled for Monday, Sept. 14, but declined to say whether a rate cut would be unveiled then. (Additional reporting by Olga Borodina and Andrei Ostroukh; writing by Toni Vorobyova; Editing by Ruth Pitchford)

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