Newspaper article International New York Times

Russian Government Tries to Support Volatile Ruble ; Finance Ministry Says It Will Join Central Bank in Selling off Reserves

Newspaper article International New York Times

Russian Government Tries to Support Volatile Ruble ; Finance Ministry Says It Will Join Central Bank in Selling off Reserves

Article excerpt

The Finance Ministry said it was prepared to sell as much as $7 billion of its foreign currency reserves to support the ruble, which an official called "extremely undervalued."

Trading in the Russian ruble continued to be volatile on Wednesday, rallying briefly on news that the Finance Ministry was ready to sell some of its foreign currency reserves, and then weakening again.

The ministry said Wednesday morning that it was prepared to sell as much as $7 billion in reserves to support the ruble, which a senior official said was "extremely undervalued."

Russia will sell "as much as we need to," Alexei V. Moiseev, the deputy finance minister, told journalists, the Interfax news agency reported. Separately, Interfax said the Finance Ministry had already begun selling reserves.

The ruble was trading in a range of roughly 62 to 73 to the dollar on Wednesday. On Tuesday, after opening the day at 64, it swung wildly to about 80 before closing at 67.50.

"It's already been a roller coaster," Luis Costa, Citigroup's head of strategy for Central and Eastern Europe, the Middle East and Africa, said Wednesday.

Mr. Costa said the market welcomed news that there would be a meeting on Wednesday of the central bank, the Foreign Ministry and important Russian companies.

"We are seeing the level of sophistication and synchronization of efforts here to stem the ruble's slide is gaining more traction," he said.

Traditionally, the Russian Central Bank has managed the ruble rate, but it transitioned to a free-float model last month. The bank has already sold more than $10 billion in foreign currency to support the ruble in December, including nearly $2 billion on Monday alone.

Some traders and strategists said the Finance Ministry's announcement would have little effect. They noted that the ministry's decision to sell foreign currency reserves was no different from the central bank's efforts, which had done little to help the ruble. …

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