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Russian Central Bank rejects capital controls as ruble hits lowest level since 1998

Russian Central Bank rejects capital controls as ruble hits lowest level since 1998

The Central Bank of Russia on Neglinnaya Street in Moscow. (RIA Novosti/Vitaliy Belousov)

​The ruble slid to a new record low of 39.71 against the dollar Tuesday. The Russian Central Bank has been quick to quash fears it would re-introduce capital controls to limit the amount of foreign currency purchases, or even moved outside the country.

“Bank of Russia is not considering the introduction of any restrictions on cross-border capital flows as it was reported in some publications in the mass-media,” the bank said in a statement on Tuesday evening.

The bank’s statement followed a report by Bloomberg News citing anonymous officials that the bank is considering imposing capital controls, as the ruble hit new historic lows.

The Central Bank said it would intervene once the euro-dollar currency basket against the ruble reached a level of 44.4, which it reached on Tuesday before quickly retreating.

Capital controls are a monetary tool by Russia’s key lender to restrict money flowing overseas, which in Russia is projected to reach $100 billion in 2014, nearly on par with the $120 billion that fled in 2008 when the financial crisis hit. In 2007 Russia had a positive net capital inflow.

Andrey Kostin, Chairman and CEO of VTB, doesn’t believe that Russia will impose capital controls just yet, talking to CNBC at VTB’s annual investment forum ‘Russia Calling!’.

“The basic issue now is whether the Russian leadership, under the circumstances, will switch to the model of a mobilization economy, and introduce the old mechanism of currency control, or they will stay on the principle of their open market economy. I think that is the big question that will be asked tomorrow,” Kostin said.

Russia repealed capital controls in 2006, however last week Central Bank Chairwoman Elvira Nabiullina said that Moscow would consider “non-standard” mechanisms to ensure economic stability.

Capital controls aren’t the only monetary tool the Central Bank could consider. If the ruble continues to weaken, it may decide to re-start currency interventions, pumping in billions of dollars to artificially prop up the currency. This would be a policy reversal for the bank, which has recently loosened its monetary controls in order to make the overvalued ruble free floating by 2015.

“Never say never, but not at this stage, definitely,” the VTB CEO said when asked if capital controls are on the horizon.

 Source

'The information war for Ukraine' - Satirical German program 'Die Anstalt' (Eng Subs)
Category: HUMOR & FUN
Tags: Humor/Satire

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Published on 25 Sep 2014

 

ZEROHEDGE: Singapore Becoming Global Gold Hub - Launches Kilo Bar Contract And Gold ATMs

Launching of SGX Gold Futures Contract: (from left) Harshika Patel, Managing Director, JP Morgan; Sunil Kashyap, Managing Director, Bank of Nova Scotia; Aram Shishmaniam, CEO, World Gold Council; Ng Cheng Thye, President, Singapore Bullion Market Association; Seah Moon Ming, Chairman, International Enterprise (IE) Singapore; Muthukrishnan Ramaswami, President, Singapore Exchange; Philip Hurley, CEO (South East Asia), Standard Merchant Bank; Jeremy East, Managing Director (Global Head of Metal Trading), Standard Chartered Bank.



Singapore Becoming Global Gold Hub - Launches Kilo Bar Contract And Gold ATMs


Singapore continues its push to be a global gold hub. The new exchange traded Singapore kilobar gold contract will launch in less than two weeks - on October 13. The new contract is a 1 kilogramme physically deliverable gold contract for the Asian and global wholesale gold market.

In a joint statement, International Enterprise (IE) Singapore, Singapore Bullion Market Association (SBMA), Singapore Exchange (SGX) and the World Gold Council, announced the new contract yesterday.

The contract will be traded on SGX, the first wholesale 25 kilo bar gold contract to be offered globally, and this is a collaboration among the four parties. The SGX is Singapore’s securities and derivatives exchange and clearing and depository provider.

This caters to the very high demand for physical gold in China and throughout Asia, which has increased significantly over the last decade.

This new gold contract differs from others in that as well as acting as a price discovery benchmark for 1kg gold bars in the Asian region, it has been specifically designed to actually deliver gold to large buyers, wholesalers and institutions, presumably including central banks.

Settlement of the contract is in gold 1kg bars and not in cash. A 1kg gold bar is 32.15 troy ounces.

The Singapore contract will be in lots of 25 kilogrammes and denominated in U.S. dollars. It will trade for three hours in the Singapore morning time. Singapore is 7 hours ahead of London and 12 hours ahead of New York, and 2.5 hours ahead of the Indian market, but is in the same time zone as both Hong Kong and Shanghai.

Six consecutive daily contracts will trade at the same time, so when one contract expires, another will be added.

Physical settlement is two days after trade date and consists of 99.99 purity 1 kilogramme gold bars that meet the approval of the Singapore Bullion Market Association (SBMA) good delivery list . This means that wholesalers will be able to gauge demand and supply of 1 kg bars over the following week.

Some analysts have said that the protests in Hong Kong and the uncertain political outlook in Hong Kong may give Singapore an advantage in terms of becoming Asia and possibly the world’s global gold hub.

Separately, the first gold-dispensing automated teller machine in Asia have been launched in Singapore. The two ATMs are in Marina Bay Sands and Resorts World Sentosa hotels.

Launched by Asia Gold ATM, Singapore is the fourth country to have the facility, next to the UAE, the UK and the US. Items such as 1g to 10g pure gold bars, as well as customised gold coins, can be bought from the machine.

Last Wednesday, the day the machines were unveiled to the public, a one gram pendant sold for $100 while it was $660 for a 10 gramme. The items can be paid through credit card or cash. Gold will be sold at different prices daily, based on the day's global prices.

The ATMs mean little or nothing with regards to Singapore becoming a global gold hub. However, they show how gold is respected and sought after in Singapore and the people and institutions of Singapore, have a significant cultural affinity with gold.

Unlike in the west, where people who believe in using gold for wealth preservation or for saving are sometimes called names and dismissively called “gold bugs”.

Gold and money, throughout history has flowed to where it is better treated. Today, gold continues to flow from West to East. A sign of shifting economic fortunes.


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