Russia's Finance Minister Alexei Kudrin, in an interview published on Thursday, said he was unconcerned that a strong rouble which has gained almost 20 percent in 2003 could hold back robust economic growth.
"I have no fears," Kudrin told Kommersant daily when asked whether he believed a strong rouble would increase the costs of local producers and put a brake on economic growth.
The Russia economy grew more than seven percent last year and looks set for a sixth year of growth in 2004 in a favourable export environment and with healthy domestic demand.
Prime Minister Mikhail Kasyanov said on Wednesday that Russia's industrial output grew 7.5 percent in January. That suggested the sector was continuing to perform well at the start of an election year.
Although the rouble rose 19 percent against the dollar last year, Kudrin said, it had slipped one percent against the euro and had firmed only four percent against a basket of the two currencies in real terms.
"If rouble appreciation is gradual, that even stimulates companies to take action to reduce costs and increase competitiveness through introduction of advanced technologies," Kudrin was quoted as saying.
The central bank forecasts that the real effective rouble rate will rise three to seven percent this year depending on global prices for crude oil, Russia's key export item.
The Russian currency has been gaining steadily against the dollar since the start of last year because of a strong balance of payments based on booming oil exports and corporate borrowing abroad.
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