Large debt payments trigger drop in Central Bank's reserves

As of June 4, the volume of the Russian Central Bank's gold and currency reserves amounted to $64.3bn, declining by $400m over the week. Over the past four weeks, this is the second drop in the gold and currency reserves. On May 16, 2003, they sank $900m.

Though on the whole, the current growth rate of the bank's reserves overcome their decline rate considerably, a repeated drop in the reserves has occurred for the first time since December 2002, which was six months ago. As for a $1.3bn tumble in the Central Bank's reserves over the past four weeks, it has been registered for the first time since the end of 2001.

Commercial bank dealers believe that the reason for such a significant plunge in the Central Bank's gold and currency reserves was large foreign debt payments by the Russian Finance Ministry. RBC's interviewees point to the fact that these repayments of Western credits turned out the most considerable in the first half of May and at the beginning of June 2003. Due to this the volume of the Central Bank's gold and currency reserves dropped over this period.

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