This came through on The Guardian's live blog of the ongoing Russian currency crisis about 7 hours ago:
Timothy Ash, an analyst at Standard Bank, is astonished by the news that the Russian finance ministry will deploy around $7bn of ‘spare’ currency reserves to prop up the rouble (as explained earlier)
Ash says the intervention is “unbelievable stuff”:
“Why, if the central bank has $413bn in reserves, is the ministry of finance being called on to put its hand in its pocket for some small change — they are like checking the back of the sofas at this stage”.
Let me read between the lines for you. Those "spare" reserves are coming from the finance ministry, instead of the Bank of Russia where announced reserves are supposedly held, because those reserves aren't actually there.
The official position of the Bank of Russia is that they had $418B of reserves on November 30. I think it's reasonable to assume that even with the crisis, that Russia has probably used up tens of billions of dollars of reserves over the last 3 weeks, but not hundreds.
So why do they need seven?
I think it's because they're lying.
Currency traders are used to countries lying about their reserves. And what they do when that happens is "attack" that currency. Basically, they try to get out of it as quickly and as "big-ly" as they can. This is what currency crises are all about: investors running for the exits.
So where'd all the money go? They don't call governments like Russia's kleptocracies for nothing.