Russia’s forex reserves dip to $383.9 billion

Russia's foreign exchange reserves fell $1.1 billion to $383.9  billion as on April 10, from $385 billion on April 3, the Russian central bank said yesterday.

Russia holds the world's third largest reserves, after China and Japan.

The drop follows a rise of $2.7 billion the previous week.

After reaching a record high of $597.5 billion in early August, reserves have declined dramatically as the central bank spent more than $200 billion of them on propping up the struggling ruble.

The World Bank recently said it expects the Russian economy to contract 4.5 per cent in 2009, down from 3 per cent growth forecast in November 2008.

''As the crisis continues to spread to the real economy around the world, initial expectations that Russia and other countries will recover fast are no longer likely,'' the World Bank said in its latest Russian Economic Report.

Russia's inflation is forecast to be around 11 per cent to 13 per cent in 2009 as a result of rising import prices and considerable relaxation in fiscal stance.

The deeper and more prolonged economic crisis is likely to have a major social impact, which is already spreading fast.

The World Bank estimates that aggregate unemployment in Russia will increase by 2.7 million people in 2009.

Russia's international reserves are made up of monetary gold, special drawing rights, reserve position at the IMF and foreign exchange.

The central bank keeps the reserves, the world's third largest, in 45 per cent dollars, 44 per cent euros, 10 per cent sterling and around 1 per cent yen, but calculates their value in dollars.

Meanwhile, China's foreign exchange reserves grew 16 per cent in the 12 months ending in March, rising to $1.95 trillion.

While foreign exchange reserves rose $7.7 billion in this year's first quarter, the increase pales in comparison to last year's first-quarter rise, which was $146.2 billion higher, the state-run Chinese news agency Xinhua reported.

China's reserves have ballooned as the central bank buys up dollars generated from its huge trade and influx of foreign investment.