Sunday, June 14, 2009

Kudrin Says Russia Has Full Confidence in Dollar

Russia has full confidence in the dollar and there are no immediate plans to switch to a new reserve currency, Finance Minister Alexei Kudrin said.

“It’s too early to speak of an alternative” to the dollar, Kudrin said in Lecce, Italy, in a television interview today after meeting with finance chiefs from the Group of Eight nations. The fundamentals of the dollar are still in “good shape.”

Russia’s central bank said on June 10 some reserves may be moved from U.S. Treasuries into International Monetary Fund debt, reiterating comments made last month by Kudrin. That drove Treasuries and the dollar lower. Kudrin said yesterday that Russia’s announcement on May 26 to buy $10 billion of IMF bonds did not represent “a significant change” in his country’s stance on the dollar.

The dollar declined against a majority of the most-traded currencies as Brazil and Russia joined China in saying they would shift some $70 billion of reserves from U.S. Treasuries into multicurrency bonds. The dollar’s drop also reflected concern that record debt sales and deficits will erode the value of the U.S. currency.

The dollar dropped 0.4 percent to $1.4016 per euro yesterday, from $1.3968 on June 5. The U.S. currency fell 0.2 percent to 98.43 yen, from 98.64 yen a week earlier. The euro was little changed at 137.89 yen, from 137.81 yen.

BRIC Summit

Leaders of Brazil, Russia, India and China, the so-called BRIC countries, are scheduled to meet on June 16 in Russia to discuss their economies.

Asked about the global economic outlook, Kudrin said “uncertainties are still there” and any change in the future stance on the dollar “will depend on the state” of the global economy. It was too early to talk about stability in oil prices, he said.

Crude for July delivery tumbled as much as 2.6 percent to $70.80 a barrel on the New York Mercantile Exchange.