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HIGHLIGHTS-Russian central bank governor speaks at press conference

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MOSCOW, Oct 23 (Reuters) - The Russian Central Bank Governor Elvira Nabiullina spoke at an online press conference after the central bank kept its key rate unchanged at 4.25% on Friday.

Below are the highlights of her comments:

ON FX SALES

“As we have said before, the principle of our policy is to smooth the impact on the foreign exchange market.”

“Apart from regular operations there will be (FX selling in the amount of) no more than 4 billion roubles ($13.1 million)... We intend to increase foreign currency sales already from Monday.”

ON ECONOMY

“The economic recovery is continuing, although at a slightly slower pace than in the summer months. At the same time increased volatility on financial markets and geopolitical risks remain.”

“Export dynamics since the start of the year have exceeded expectations.”

ON ROUBLE IMPACT ON INFLATION

“The weakening of the rouble has not yet completely been transferred to prices. In our view, this transfer will take time and could last up to 9-12 months.”

“If we assume that the exchange rate remains stable, then the weakening that occurred in August-September will add around one percentage point to inflation sometime in the spring of next year.”

ON BASELINE SCENARIO

“We highlight the baseline scenario that we consider to be the basis for our decision. But in conditions of so much uncertainty, it is possible that the situation might develop in line with other scenarios.”

ON ROUBLE

“We do not see any risks to financial stability in foreign currency dynamics. There is enough liquidity in the market and trading volumes are absolutely normal.”

“We don’t think any special intervention is required, especially since exporters sell their foreign currency revenue in a fairly stable manner.”

“On the whole, foreign currency fluctuations ... are on average comparable to what there was in 2018.”

“We take foreign currency dynamics into account when making decisions.”

ON INFLATION

“Short-term pro-inflationary risks, linked to the situation on financial markets, have now strengthened. An increased impact on prices could also occur if the epidemiological environment has a significant influence not only on demand, but also on the supply of goods and services.”

“The current situation with coronavirus raises disinflationary risks for 2021 and we expect to pursue soft monetary policy.”

ON KEY RATE

“A lowering of the key rate could translate into a stronger exchange rate reaction so we will carefully assess the space for further policy easing.”

“We still see room to lower the rate.” ($1 = 76.4775 roubles) (Reporting by Elena Fabrichnaya, Darya Korsunskaya and Anastasia Lyrchikova; Writing by Alexander Marrow, editing by Maria Kiselyova)

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