Russia » Economics
Author`s name Michael Simpson

Russians Like Currency, Euro Particularly

The aggregate demand of the Russian population for foreign currency gained 9 per cent
The aggregate demand of the Russian population for foreign currency (purchased at exchange offices, acquired through conversion and withdrawn from bank accounts) gained 9 per cent to $5.504 billion in October 2003 which is bigger than over the same periods in 2001 and 2002 (in those cases the increase made up 2.1 and 1.4 times correspondingly). What is more, the recent growth has become the highest showing registered over the period since the 1998 economic crisis. The sum withdrawn from currency accounts by natural persons increased by 13 per cent in October and currency purchased at exchange offices - by 4 per cent.

In October, the aggregate demand of Russia's residents for currency increased by 5 per cent to $3.814 billion, of non-residents - by 19 per cent to $1.691 billion. The sum withdrawn by residents from their currency accounts increased by 7 per cent and currency purchased at exchange offices increased by 3 per cent as compared with September; both showings for non-residents made up 22 and 11 per cent correspondingly.

As a result of the dollar to ruble rate reduction in October and the simultaneous euro strengthening, the population preferred cash euros to dollars. Thus, in October the demand for cash dollars increased by 6 per cent as compared with September ($4.8 billion vs. $4.6 billion), while the demand for cash euros increased by 42 per cent over the month (the equivalent of $0.66 billion vs. the equivalent of $.046 billion).

The euro share in the aggregate demand of Russia's residents for currency increased from 12 to 16 per cent. The aggregate supply of cash currency (currency sold at exchange offices, given for conversion and deposited on currency accounts in banks) increased by 12 per cent to $4 billion in October as compared with September which is higher than over the same periods in 2001 and 2002 (the increase made up 1.7 and 1.5 times correspondingly). It has become the highest showing registered over the whole period of the monitoring.
 
The increase in the supply of foreign currency was caused by bigger sums of currency sold at exchange offices and given for conversion by natural persons (the increase made up 20 per cent), as well as by more currency deposited on currency bank accounts of natural persons (the increase made up 6 per cent). The number of transactions with currency arranged by natural persons at exchange offices has not practically changed as compared with September, the average amount of transactions increased by 15 per cent.
 
The average supply of cash currency among residents and non-residents increased by 12 per cent. At the same time, the volume of currency sold at exchange offices by residents increased by 21 per cent and currency deposited on bank accounts by non-residents increased by 15 per cent.

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