Russia sold $11.3b to support ruble on ‘Black Monday’

07 March 2014

AFP, Moscow :
Russia Wednesday revealed it sold a record $11.3 billion in foreign currency to support the ruble on March 3, during a "Black Monday" of panic selling over the crisis in Ukraine which analysts say rattled the Kremlin.
The Russian central bank sold foreign currency to buy rubles and prevent the Russian currency from falling further in value, after the market reacted with shock to parliamentary approval for President Vladimir Putin's request to allow military action in Ukraine.
Russian news agencies said that the amount of foreign currency sold by the central bank on Monday was by far the most since records began, beating the previous record from September 2011 by about five times.
With Putin also finally speaking out to moderate the boiling tensions Tuesday, the intervention helped the ruble recover most of its losses by Wednesday afternoon.
"Investors reacted rather nervously to the increase of political uncertainty in Ukraine," Russia's central bank chief Elvira Nabiullina said at a meeting with Putin Wednesday, using the characteristic understatement of a central banker.
She confirmed the figure of over $11 billion that was published earlier in a regular data release by the central bank.  But she said interventions had been far lower on Tuesday, with the bank selling $300 million of foreign currency. Russia's total foreign currency reserves amounted to $493.4 billion as of February 21, meaning that the central bank sold just over two percent of its reserves in one day of trading on March 3.
The intervention appears to have been successful, with the ruble rate now stabilising after "Black Monday", when the Russian equity markets also tumbled over 10 percent.
In late trade Wednesday, the ruble strengthened to trade at 35.99 to the dollar and 49.44 to the euro. At the close of trade in Moscow on Monday, the ruble had been trading at record low values of 36.44 to the dollar and 50.22 to the euro.
The mood on markets was helped by comments by Putin on Tuesday that there was currently no need to send Russian troops to Ukraine and military action would only be used as a last resort.
Nabiullina also moved to boost sentiment Wednesday by talking up the ruble as undervalued.

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