Dollar Buying Probed by Central Bank

The Central Bank has launched its own search for culprits behind Tuesday's sharp devaluation of the ruble, ordering commercial banks to provide detailed reports on their dollar purchases over the past two weeks, bankers said Friday.


"This is just like 1939," said Boris Sergeyev, an economic analyst for TokoBank, referring to the era of Stalin's purges. "It is stupidity, and it reflects the level of thinking of our government."


Economics Minister Alexander Shokhin warned earlier this week that the government would investigate dollar trades in search of "illegal" transactions.


Igor Doronin, currency expert at the Moscow Interbank Currency Exchange, said the Central Bank was probably looking for violations of pre-crash rules, under which each bank was allowed to buy only a small amount of hard currency for profit over and above the currency it purchased on behalf of its clients. A spokeswoman for the Central Bank refused to comment.


Yevgeny Rogachov, a currency trader at Menatep Bank, said Friday that Menatep had received a letter from Alexander Potemkin, head of the Central Bank's hard-currency department, ordering the bank to report "how many dollars we bought."


"It's hard to judge what this is for," Rogachov said. "They're looking for guilty people, but I think they're barking up the wrong tree."


Sergeyev agreed, saying that currency speculation is part of any normally functioning market.


"You buy dollars for two reasons, for your clients or for a profit," he said. "The banks working on the exchange are all working legally, playing by the rules of the game worked out by the Central Bank."


Since the ruble plummeted to 3,926 to the dollar on Tuesday in its worst drop ever, acting Finance Minister Sergei Dubinin has been fired, Central Bank Chairman Viktor Gerashchenko has offered his resignation and the currency has rebounded to less than 3,000 per dollar on the strength of Central Bank intervention.


The ruble inched up further in trading Friday, closing six points up at 2988 with demand for dollars at an unusually low $52.5 million. Bankers attributed the low demand to new Central Bank rules introduced Thursday which require banks to pay in advance for dollars, making speculative purchases unprofitable.


But the search is for scapegoats is still on, and commercial banks are prime candidates.


In a decree published Friday, President Boris Yeltsin set up a commission including top officials of the Federal Counterintelligence Service, the Security Council, the Interior Ministry, the Central Bank, the Finance Ministry and the State Property Committee to investigate the causes for the ruble's fall.


A member of the commission, Federation Council member Valeryan Viktorov, told Interfax that the commission knew which commercial banks triggered the crisis, and would name them in a report to Yeltsin by Saturday.


One Western economist on Friday attributed the ruble's comeback in part to the investigation, saying he believed banks refrained from buying dollars to avoid drawing attention to themselves.


"If you're a bank in this country, your conscience is not totally clean," he said. "Not that you've been conspiring against the government, but you have probably haven't paid all your taxes. The banker thinks: 'If I buy a lot of dollars, someone may come and investigate. Let's keep a low profile for a while.'"