for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up

UPDATE 2-Russian gold/forex reserves pass $0.5 trln threshold

 (Updates with officials, details)
 MOSCOW, March 20 (Reuters) - Russia's gold and foreign
exchange reserves, the world's third largest, have surged past
the $0.5 trillion threshold, indicating the country's oil
bonanza may last longer during a global downturn. 
  The central bank said on Thursday the reserves rose to
$502.1 billion on March 14 from $494.5 billion on March 7 and
analysts said the data confirmed the regulator had resumed
purchases of foreign currency in March after a pause at the
start of the year.
 Russia, the world's No.2 oil exporter, has been relatively
insulated from turbulence in global financial markets as prices
for oil, its main export commodity, hit record highs on
speculative demand and supply uncertainty. 
 The spot price for Urals URL-E, Russia's main export
blend, dropped to $95 per barrel from $105 earlier this week as
investors cut their exposure to commodity assets. The Russian
2008 budget is balanced at an average price of $74 per barrel. 
 The inflow of currency from energy exports in March has
neutralised capital outflows, which netted at about $18 billion
in January-February and are expected to net at about $9 billion
in March. 
 "The inflow of foreign currency is so big, the price for oil
is so high, that it beats everything," said Yevgeny Nadorshin,
analyst at Trust Bank, suggesting Russia has returned to its
"natural" state of reserve growth of the past few years. 
 
 RELIEF
 The continued inflow of oil windfall revenues may lead to 
an easing of the recent liquidity shortage, a possible decline
of interest rates and renewed appreciation pressure on the
Russian currency. 
 "It is positive for liquidity. It is positive for interest
rates," Nadorshin said, adding renewed currency inflows would
flood the money market with liquidity, badly needed by banks and
corporations that have foreign debt. 
 Russia's largest oil company Rosneft ROSN.MM said this
week it had completed repayment of the second, $5.2 billion
tranche of the short-term loan it raised last year to finance
acquisitions. 
 "There is a certain relief which, among other things, is
related to Rosneft repaying its debt," said Nikolai Kashcheyev,
economist at the state-owned VTB Bank. "But by no means is this
relief a long-term factor." 
 The increase comes amid a debate on how the country should
use the reserves, which include $160 billion in the two oil
funds -- the National Wealth Fund (NWF) and the Reserve Fund,
and whether the Russian economy is overheated and needs to slow.
 
 ADDITIONAL CHALLENGES
 The reserves are currently invested in dollar, euro and
British pound assets and include small holdings in yen and Swiss
franc. The central bank has said it is mulling further
diversification but has a limited choice of currencies. 
 Outgoing President Vladimir Putin, who will most likely take
over as Russia's next prime minister, asked his cabinet to alter
the reserves' management and find ways to help banks, struggling
to cope with the liquidity shortage. 
 Putin's economic advisers, officials at the economy ministry
and business lobbies have proposed cutting taxes and investing
part of the $32 billion NWF at home to maintain high growth
rates but Finance Minister Alexei Kudrin says the economy is
overheated. 
 Kudrin, who resists fiscal loosening plans already backed by
Putin and President-elect Dmitry Medvedev, has warned against
over-reliance on energy prices and said the global financial
turmoil was yet to hit Russia. 
 "At the moment the oil prices cannot be viewed as reliable,
stable and predictable," Kudrin told the parliament this week.
"The global crisis is still posing additional challenges and
risks for Russia in 2008," he said. 
 (Reporting by Gleb Bryanski; editing by Stephen Nisbet)

for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up