It would occur to me to check out how much of dollar holdings in Russian are individual vs corporate / business accounts. I am guessing that is not the easiest number to come up with. It also seems possible that there are a mix of reasons why corporate accounts are still sticking with the dollar. One reason might be that there are probably a fair number of administrative costs associated with a big switch for the short term. So if the situation in Iraq goes badly, would there likely be more corporate switching?
DoreneC
In a message dated 3/18/2003 11:13:34 PM Pacific Standard Time, chrisd at russiajournal.com writes:
> Subj:Russians ditch dollar for euro
> Date:3/18/2003 11:13:34 PM Pacific Standard Time
> From:<A HREF="mailto:chrisd at russiajournal.com">chrisd at russiajournal.com</A>
> Reply-to:<A HREF="mailto:lbo-talk at lists.panix.com">lbo-talk at lists.panix.com</A>
> To:<A HREF="mailto:lbo-talk at lists.panix.com">lbo-talk at lists.panix.com</A>
> Sent from the Internet
>
>
>
> Moscow Times
> March 18, 2003
> Dollar Dethroned as Top Saving Tool
> By Victoria Lavrentieva
> Staff Writer
>
> It only took two years for a new suitor to end Russians' monogamous love
> affair with the dollar.
>
> On balance, Russians bought more euros than dollars in January for the
> first
>
> time since the European currency's notes and coins became available Jan. 1,
>
> 2001, according to the latest Central Bank data.
>
> While in gross terms, Russians bought more dollars from retail banks than
> euros in the month -- $1.193 billion versus 701 million euros -- they also
> sold more. The result is that 598 million euros made its way into the hands
>
> of the population, compared to just 438 million bucks.
>
> Worried by the continued weakness of the greenback, which has lost more
> than
>
> 10 percent against the euro in recent months and 1.3 percent against the
> ruble since the beginning of the year, people are rushing to diversify
> their
>
> once dollar-only savings.
>
> Analysts, however, say the trend is temporary and that the market will
> likely
> stabilize once the Iraqi conflict is resolved.
>
> "The situation in Iraq is the main factor that affects the dollar/euro rate
>
> and the demand for cash currency," said Natalya Orlova, an economist with
> Alfa Bank.
>
> "The longer we see uncertainty over Iraq, the weaker the dollar and the
> higher demand for the euros," she said.
>
> In total, imports of euros by Russian banks doubled to a record 751 million
>
> in January, while average Russians bought seven times more of the currency
> than they sold, the Central Bank said.
>
> Bankers now say that demand for dollars has practically dried up, as
> everyone
> is selling: Banks imported a total of just $944 million in January,
> compared
>
> to $2.5 billion in December.
>
> "Demand for cash euros has been growing by 20 percent to 30 percent a
> month,"
> said Kirill Grishanov, head of the currency and money market department of
> Raiffeisenbank Moscow. "It's a good time for Russians to buy euros now, as
> the currency has proved to be a good means of savings."
>
> "If this trend continues, Russia might become an exporter of cash dollars
> for
> the second time in the last decade," said Vasily Zablodsky, deputy head of
> the investment department at MDM Bank, one of the largest importers of cash
>
> currency in the market.
>
> Zablodsky said the last time Russia was a net exporter of dollars was after
>
> the terrorist attacks in America in September 2001.
>
> Zablodsky said that once the Iraqi crisis is resolved he expected the
> dollar
>
> to regain parity with the euro.
>
> "In the end, we will have two major world currencies and a more equal risk
> distribution between them," he said.
>
> Although some companies such as car dealerships and tourist agencies have
> started marking their prices in euros, experts doubt that the European
> currency's importance to the Russian economy as a whole will match the
> dollar's any time soon.
>
> "It is premature to speak about a 'de-dollarization' of the economy because
>
> the corporate sector still prefers to use dollars," Orlova said.
>
>
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