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Russia becoming highly dollarized

Russia becoming highly dollarized
By UNITED PRESS INTERNATIONAL
Published April 15, 2005

MOSCOW -- Russia is reportedly abandoning its own currency as legal tender in favor of more stable foreign currencies like the U.S. dollar.

Foreign currency bank deposits in Russia account for about a third of the money supply, foreign debt comprises a third of the gross domestic product and private sector debt makes up a half of the country's external debt, reports the Novosti news agency.

The figures are supplied by the Moscow International Institute of Econometrics, Information Technology, Finances and Law based on levels of foreign exchange funds held by households and companies and foreign exchange loans taken out by the government and the corporate sector.

Experts say the growing dollarization is due to fears of a ruble depreciation and macro-economic instability.

The Bank of Russia began a de-dollarization process two years ago as part of gains by the ruble. However, data on foreign exchange operations for 2004 show the process is not making headway.


LINK: http://www.wpherald.com/Business/storyview.php?StoryID=20050415-115223-1835r