MOSCOW, August 4 (RIA Novosti) - Russia must not permit the strengthening of the ruble, Russian Finance Minister Alexei Kudrin said Thursday at a cabinet session.
The use of the Stabilization Fund finances as well as the reduction of inflow to the fund from oil export sales could result in an additional strengthening of the national currency to the detriment of national industries, Kudrin said.
The Russian Stabilization Fund was formed on January 1, 2004. The fund receives money from oil export sales when oil prices exceed $20 per barrel.
"We cannot weaken the current policy," he said.
He used China as an example, which increased its gold and currency reserves up to $200 billion to slow the pace of inflation. Last year China's inflation rate was 3.9%, the minister said.
Kudrin said the predicted increase of Russian gold and currency reserves for 2005 was $50 billion. However, the reserves would probably increase by $80 billion, the minister said.
"The growth of the gold and currency reserves will happen due to the increase of oil prices and the attempts of the Central Bank of Russia to restrain the strengthening of ruble," he said.
Russian gold and currency reserves currently stand at $144 billion.
According to the minister, the current exchange rate of rubles to dollars has reached the level of the 1997 rate.
"Six rubles per dollar in 1997 equals the current 28 rubles per dollar," Kudrin said.
The minister said strengthening the ruble by 10%-11% each year should be stopped. This would be a blow to the competitiveness of domestic manufacturers, he said.
The volume of the Stabilization Fund as of August 1, 2005 was $25 billion. The Russian Trade and Economic Development Ministry predicts an increase in the volume up to $45 billion.