Central Bank Stops Supporting Dollar

Oct. 22, 2004
News From Russia

The weighted average dollar exchange rate was 29 RUR/USD in the first 90 minutes of trade at a special session today. Thus, the official dollar rate for October 23-25 will decrease by RUR0.12. This is the most considerable one-day drop of the dollar against the ruble since late April. The low on the deals was even 28.95 RUR/USD at the UTS.

According to commercial bank dealers, the Central Bank has not supported the dollar despite a large selling of dollars by market participants.

Banks sold over $436m at a special session at 11:30 a.m. Moscow time. Yesterday, the trade volume was just $19m at the UTS at the same time. The average lot of dollars to be sold was $1.7m in the first 90 minutes of trading.

A Bank of Moscow expert told RBC TV that the trade volume on MICEX including a special session for today deals almost reached $1bn in the first 30 minutes of trading. The expert said that the Central Bank's activities could be attributed to the dollar's decrease on international exchanges and growth in the gold and currency reserves in Russia. However, the Central Bank's leaving the market at the end of the week was quite unexpected. The specialist thinks that the Central Bank is currently concerned about its obligations on preventing inflation.

Russia's Central Bank has ceased to support the US Dollar. The timing of this event is both highly curious and suspect. Should the American dollar experience massive sales by foreign central banks and individuals, then it is clear that an attack on the USD is underway prior to the election � which may precede physical terror attacks upon the continental U.S.


newsfromrussia.com...

Originally posted by SIRR1
Russia's Central Bank has ceased to support the US Dollar. The timing of this event is both highly curious and suspect. Should the American dollar experience massive sales by foreign central banks and individuals, then it is clear that an attack on the USD is underway prior to the election � which may precede physical terror attacks upon the continental U.S.
newsfromrussia.com...

This is not good at all. The dollar is already at an 8-month low and falling.

I'm not sure that it is an "attack" on the dollar though. Two factors are at play.

First: The political situation in the US is being viewed with concern.

Second: The Euro is worth more and oil is expensive. Many countries are increasing their Euro holdings and dumping the dollar. If it continues to decline in value watch the petrodollar change to the petroeuro. Then all hell will break loose.

Very interesting - Although I suspect any attack on the USD is more likely a vote against Bush and a legitimate response to the US predicament rather than a prelude to physical attack on the US.

This might have something to do with the EU giving its backing for Russia to become a member of the WTO which would increase Russia's access to European goods...of course in the euro currency.

Attack on the dollar ?????

When you are spending money far faster than you earn it, and you sink deeper and deeper into debt, nobody is attacking you. You are doing it to yourself.

Its just like personal debt. People get a new credit card and go out and spend up big. Then when the bill comes a month later they say "wow look what they have done to me" I am a victim. Hardly........