Russia Transfers $1 Bln Worth of Gold to CB

Source:

"The Central Bank has plenty of currency reserves. Why would it want to sell gold now?"

Russia's Finance Ministry has sold 30 metric tons of gold to the country's Central Bank (CB) for $1 billion, an official said Monday, saying the cash will be use to help ease the crisis in the country's budget.

The deal marks the first large sale of gold from Russian coffers since the collapse of the Soviet Union. Russia is weathering its worst financial crisis in a decade.

A Finance Ministry spokesman said the deal was struck last week. The spokesman would not say what the CB planned to do with the gold, but Finance Minister Alexei Kudrin said in October that Moscow was considering selling gold on world markets to cash in on high prices and further replenish the budget.

Bank representatives said they were unaware of the deal.

Analysts doubted that this could be a precursor for a market sale of gold.

"I don't think the Central Bank will be selling it anywhere, although it can dispose of its reserves as it pleases—buy or sell," Alexei Morozov, metals analyst with UBS in Moscow, said.

The Finance Ministry is likely to take the proceeds directly from the gold sale and send the money to the budget, Merrill Lynch's chief economist in Russia, Yulia Tsyplyayeva, said.

Russia's gold and foreign currency reserves—the world's third-largest—stood at $443.7 billion as of Dec. 11, according to the CB. The gold reserves stood at some 613 metric tons as of Dec. 1, worth $23 billion.

Tsyplyayeva said the CB bought the gold as a safeguard against currency risks.

"The Central Bank's intention is that when there is an uncertainty on the currency markets, gold will have growth potential," she said. "The Central Bank has plenty of currency reserves.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe