May 24, 2015
Translated from Russian by J.Hawk
Russia’s gold and foreign currency reached $362.3 billion, according to the Bank of Russia. As of May 8, the reserves totaled $358.5 billion. Thus the grew by $3.8 billion in a single week. The Bank of Russia press service explained to journalists that the growth of the reserve fund was mainly due to favorable exchange rate shifts. Moreover, the Bank of Russia began to regularly purchase foreign currency in order to replenish its reserves, buying $581 million between May 13 and May 15.
Foreign reserves represent highly liquid financial assets which are at the disposal of the Bank of Russia and the Russian government. They consist of foreign currency assets, monetary gold, special drawing rights, the reserve position in the IMF, and other reserve assets.
$3.8 billion in a week…and the ruble is still below $50…
J.Hawk’s Comment: This is by now a highly predictable practice, suggesting that the current exchange rate is not the highest, but rather the lowest exchange rate the Bank of Russia (and the Russian government) is willing to tolerate. Anything too far below $50 would start to hurt Russian manufacturers. I suspect the actual “comfort zone” is between $40 to $60, but it’s nice to have a a safety margin like that.