July 14, 2015 / 4:27 PM / 2 years ago

GRAPHICS-Russian, Indian reserves rise in Q2

LONDON, July 14 (Reuters) - Russian hard currency reserves posted their first quarterly increase since 2013 in the March-June period, while Indian reserves hit record highs.

Russian reserves have fallen more than $110 billion since last June due to authorities' defence of the rouble in late 2014, but since May the central bank has been purchasing hard currency, helping reserves rise to $362 billion by end-June, the following graphic shows: link.reuters.com/huf76v

That compares with $354 billion at the end of March and is the first quarterly increase since September 2013 when the central bank had $515 billion.

The bank has signalled it will accumulate reserves until they reach “comfortable” levels around $500 billion .

Potential for further reserve building may be limited however if the newly struck deal over Iran’s nuclear programme drives down oil prices. Russian companies also face heavy external debt payments, with some $14 and $22 billion due in September and December respectively, according to RBS.

“In this environment (the central bank) will likely be forced to resume provision of FX liquidity from its reserves for external debt refinancing, in our view,” RBS said in a note.

Another victim of falling oil prices was Nigeria whose reserves fell to $29 billion as the central bank spent around $5 billion since January defending the naira. More recently it imposed import curbs, which it said were helping reserves to recover - they rose to $31 billion by July 7.

Reserves are up in India since taking a knock during the 2013 rupee selloff. Thanks to central bank purchases amid last year’s buoyant investment inflows, Indian reserves rose to record highs and stand 12 percent higher than year-ago levels, the biggest gain of any major emerging economy.

So far this year they are up $35 billion and over the quarter they rose $11.5 billion.

Overall, emerging market reserves, excluding China, fell to$3.79 trillion by end-June, according to CrossBorder Capital consultancy - a $110 billion decline from year-ago levels, this graphic shows: link.reuters.com/nyf76v

That was driven by Russia and also valuation effects as the euro and yen weakened against the dollar. But sluggish trade means countries from South Korea to Brazil are unable to accumulate reserves as the same pace as before.

Exports from emerging markets are shrinking year-on-year at the sharpest rate since the 2008-09 crisis, a UBS study found.

“There is no reason to think there will be big accumulation of reserves going forward; global demand is weak and intra-EM trade has weakened as well,” said Neil Shearing, head of emerging markets research at Capital Economics.

“Fundamentally underpinning all this is the idea that the surge of trade driven by a wave of globalisation and the integration of China into the global economy is fading.”

Reserves are shrinking globally, with IMF data showing last month that they fell to $11.433 trillion in the first quarter from $11.589 trillion at the end of 2014. The decline began in the third quarter of 2014.

Chinese reserves, the world's biggest, are also shrinking, having posted their fourth straight quarterly fall. They stood at $3.69 trillion at the end of June, compared with $3.73 trillion at the end of March: link.reuters.com/ken99s

For a table on central bank reserves click: (Reporting by Sujata Rao; Graphic by Vincent Flasseur; Editing by Ruth Pitchford)

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