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UPDATE 1-Russian cenbank says it used cash FX accumulated in state reserves

April 18, 2022By Reuters

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The Russian central bank, which has lost access to nearly half of its gold and forex reserves due to Western sanctions, had accumulated foreign currency in cash that it has used, Central Bank Deputy Governor Ksenia Yudayeva said on Friday.

Foreign sanctions have frozen about $300 billion of around $640 billion that Russia had in its gold and forex reserves when Russia started what it calls “a special military operation” in Ukraine on Feb. 24.

Yudayeva said the central bank sanctions left it with less liquid reserves in gold and the Chinese yuan.

“We also had been accumulating cash FX. And it came in useful,” Yudayeva told a webinar on the Russian financial sector hosted by the Higher School of Economics university in Moscow.

Yudayeva did not disclose the amount of cash FX used.

Russia’s gold and forex reserves fell sharply to $604.4 billion by March 25 from a record high of $643.2 billion as of Feb. 28.

The central bank explained the decline by its short-lived forex interventions and refinancing operations, as well as by a revaluation of assets in reserves.

The Russian central bank had assessed the probability that its gold and foreign reserves could be frozen as low, Yudayeva said earlier this week.

On Friday, Yudayeva said sanctions against Russia will have a negative impact on the global economy, adding that a ban on operations with the central bank and the government was unprecedented.

To address the aftermath of sanctions and a sharp drop in the rouble after Feb. 24, the central bank imposed foreign exchange controls to support liquidity. But the bank still aims to preserve market pricing principles and a rouble exchange rate determined by the market, Yudayeva said.

On Friday, the rouble firmed past 80 against the dollar, retaining support from export-focused companies that are now obliged to sell 80% of their FX revenues on the domestic market. nL2N2WD0HQ

(Reporting by Reuters
Editing by Raissa Kasolowsky and Andrew Cawthorne)

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