Financial Regulatory Forum

Russia eyes “soft” measures against capital inflow

By Reuters Staff
November 18, 2009

Russia eyes “soft” measures against capital inflow
MOSCOW, Nov 18 (Reuters) – Russia is discussing possible “soft” measures to limit speculative capital inflows and may adjust the parameters of its currency market intervention policy, central bank chairman Sergei Ignatyev said on Wednesday.

“I am against resuming capital control measures. At the same time, there are other measures, softer ones, which could slow down the inflow of speculative capital,” Ignatyev told reporters, mentioning such measures as monitoring external borrowing of state-controlled companies.

Currently the central bank allows the rouble’s floating corridor to shift by 5 kopecks for each $700 million of interventions at either of the band’s boundaries.

“The order of interventions may change … It is possible that the floating (rouble) corridor could be altered not just automatically,” Ignatyev said.

He said Russia could move to inflation targeting and a rouble free-float in the next 1-1/2 to 2 years.

Ignatyev also reiterated the likelihood of more rate cuts, saying the benchmark refinancing rate could be cut to under 9.00 percent next year from 9.50 percent currently.

The minimum one-day repo rate, now at 6.75 percent, will be reduced more slowly than the refi, he added.

(Reporting by Yelena Fabrichnaya; Writing by Toni Vorobyova) ((antonina.vorobyova@reuters.com; Tel: +7495 7751242, Reuters Messaging: antonina.vorobyova.reuters.com@reuters.net))

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