November 19, 2008 / 10:18 AM / 11 years ago

UPDATE 1-Russia spending on rouble reached $58 bln in Sept-Oct

(Combines with finance minister comments)

MOSCOW, Nov 19 (Reuters) - Russia’s central bank sold $57.5 billion of its hard currency reserves in the last two months to support the rouble and poured another $14 billion into the state’s banking bailout, the bank’s governor said on Wednesday.

Governor Sergei Ignatiyev also said the bank’s holdings in securities of U.S. companies Fannie Mae FNM.N and Freddie Mac FRE.N had fallen by some $45 billion this year.

A 20 percent slump in Russia’s foreign currency reserves since August have fuelled market expectations that the bank would have to allow the rouble to depreciate further after it allowed a 1 percent fall earlier this month.

“Investments of the Bank of Russia in securities, and I’d like to highlight that these are securities, not shares of Fannie Mae and Freddie Mac, fell from Jan.1 to Nov. 1 2008 from $65.6 billion to $20.9 billion,” Russia’s central bank chairman Sergei Ignatiyev said.

“At the moment, the Bank of Russia is not selling securities of those issuers but is not proceeding with new purchases either. The volumes of holding of the Bank of Russia in those securities are decreasing as papers are being redeemed.”

Ignatiyev was speaking at the lower house of parliament, the Duma, as MPs asked the central bank and the finance minister to explain how Russia manages its gold and forex reserves, the world’s third largest.

The reserves, which Russia accumulated during the period of record high oil prices, are down by around a fifth to $475 billion since reaching a peak of nearly $600 billion in August.

The reserves have been under fierce pressure from heavy foreign currency sales to defend the rouble, even at its new, lower level against the central bank euro-dollar basket.

Ignatiyev said that apart from the currency sales, the sharp fall in reserves was due to a $14 billion contribution to the government’s bank bailout programme while an additional $30.1 billion fall was due to revaluation of the currencies.

As of Nov. 1, reserves were 45 percent held in U.S. dollars, about 44 percent in euros, “just above” 1 percent as Japanese yen and 10 percent as British pounds, he said.

Finance Minister Alexei Kudrin told the parliament Russia has spent 90 billion roubles ($3.28 billion) on domestic stock and bond purchases so far this year out of the planned 250 billion roubles.

“As of today, 18 percent of the national wealth fund has been placed on the local market,” Kudrin said. (Reporting by Yelena Fabrichnaya and Gleb Bryanski, writing by Dmitry Zhdannikov; editing by Patrick Graham)

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