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According to an internal memo circulated last week.

CBR’s FX reserves up by USD 4.5bn (1.6% w/w) to USD 283.4bn on Nov 17-24. CBR’s FX reserves reached USD 283.4bn as of Nov 24, which is USD 4.5bn (1.6% w/w) increase comparing with the Nov 17 reading. Worth noting, the reserves were increasing during the last six weeks, posting a USD 16.9bn growth over this period. However, the current size of FX reserves only slightly exceeds the volume reached in mid-August. In terms of FX reserves Russia got closer to the world’s leaders, China and Japan .FX-rates of USD and EUR against RUR demonstrated the following dynamics during the week. On Nov 17 RUR/USD exchange rate stood at 26.65. On Nov 18 USD strengthened against RUR to 26.69. On Nov 21 it lost 5 kopeks, but then rose slightly to 26.65 on Nov 22. After that USD started to weaken again. It fell by 4 kopeks against RUR to 26.61 Nov 23 and by 6 kopeks on Nov 24. RUR/EUR rate was 34.17 on Nov 17 and it demonstrated a reverse dynamics during the week. On Nov 18 EUR lost 3 kopeks against RUR to 34.12 RUR/EUR. On Nov 21 EUR appreciated against RUR to 34.19. The trend continued until the end of the week (except for small fall on Nov 22). RUR/EUR rate reached 34.36.

EU commissioner visits Astana, seeks energy cooperation. EU Energy Commissioner Andris Piebalgs met with president Nursultan Nazarbayev. Piebalgs announced that it is planned to sign 2 agreements with the Central Asian state in mid-December, during Nazarbayev’s visit to Brussels . The first document concerns energy supplies from Kazakhstan to the EU as well as European investments in the Kazakh energy sector. The second document regards nuclear energy and includes a possibility for direct cooperation in the field of uranium trade. Piebalgs also stated that EU sees Kazakhstan as a potential gas supplier.

Central bank maintains cautious stance on monetary policy. The Central Bank said that the mismatch between the medium-term inflation expectations and the targets, the risks related to services prices and uncertainties in the global economy necessitate the monetary policy to remain cautious in the medium term. The central bank released the summary of the monetary policy committee meeting held on Nov 23, where the monetary authority decided to keep its key ON borrowing and lending rate unchanged at 17.5% and 22.5%, as expected. The central bank said that the continuation of the EU accession process and the uninterrupted implementation of the structural reforms are still crucial in terms of medium and long-term outlook. The monetary authority noted the significant slow down in the demand for private expenditure groups such as durable goods and housing while underlined that external demand remains relatively strong. Despite the fact that increase in oil prices came to a halt in recent months, said the central bank, lagged effects of the past increases on natural gas prices have been observed.

PM Kaczynski: Polish zloty is undervalued. The Polish zloty is undervalued, it’s value should be below PLN 4, said Prime Minister Jaroslaw Kaczynski. According to member of the Monetary Policy Council (RPP) Dariusz Filar, this statement might further strengthen the Polish currency, which might prove unwelcome by exporters, reported daily Gazeta Wyborcza . Deputy finance minister Piotr Soroczynski expects the zloty to trade at below 3.70 per EUR by the end of the year vs. around 3.81 now, the daily Rzeczpospolita said. tom

Low cost air carrier SkyEurope sees loss go up by 64.3% y/y for past fiscal year. The fiscal year of the low cost airline SkyEurope ended on September this year and the company registered an EBIT loss of EUR 55.2mn, up by 64.3% y/y, the company reported. The revenues increased significantly by 40.7% y/y to EUR 158.6mn for the period as the number of the transported passengers increased by 48% y/y to 2.6mn people. A key factor for this growth was that the airline boosted its capacity by 44% as it bought five new Boeing planes and opened 35 new routes. Capacity utilisation, however, dropped by 2.1pps y/y to 75.6%. The plane acquisition together with the establishment of another operating base in Prague negatively influenced the financial result of the company. An additional factor were the high oil prices on the international markets as the fuel costs represented 23% of the total operating costs. Fuel costs were up only by 6.4% y/y due to hedging activities of the airline and boosted total operating costs by 46.2% y/y to EUR 213.8mn for the period.

Kazakhstan wants Gazprom to pay higher gas transit tariffs. Energy minister Baktykozha Izmukhambetov stated that KazTransGas (a subsidiary of national oil & gas holding) is in talks with Russian Gazprom on possible gas transportation tariffs hike. Izmukhambetov explained that such negotiations are conducted every year. Presently, Gazprom pays USD 1.1 per 1,000 m 3 per 100km. Kazakhstan propose tariff to stand at USD 1.6 per 1,000 m 3 per 100km. Earlier, KazTransGas stated that it wants to increase revenues from transit by at least 30% to KZT 18.6bn (USD 140mn). The Russian company transfers through Kazakh territory gas from Turkmenistan and Uzbekistan . As we reported, Gazprom and KazMunayGas signed an agreement on increasing transit of Uzbek and Turkmen gas to 55bn m 3 per annum. Presently, the Kazakh company works on increasing the capacity of its transit system to this volume.

Central bank board unanimously leaves interest rates unchanged. The Czech National Bank (CNB) Governing Board unanimously left interest rates unchanged at its latest monetary session, in line with markets’ expectations, the CNB announced on its website. Thus the basic repo rate of the bank remained at 2.5%, which is still lower than in the euro zone. Among the factors in favour of stable rates was deemed the favourable inflationary developments with the latest consumer price inflation data being significantly lower than the CNB projections and target band thanks to the falling oil prices and their level being below their long-term average, as well as due to the recently observed CZK strengthening, CNB governor Zdenek Tuma explained. Furthermore, the recent talks in the Chamber of Deputies have shown that the government is likely to postpone the entry into force of the planned indirect taxes hikes, the excise on tobacco in particular, which would have played significant upward pressure on inflation, Tuma said. In addition, the board assessed the economy’s state as favourable; still, a new forecast to be made at beginning-2007 would allow for better assessing the current developments, Tuma stated, adding that if prices developments and the CZK rate remains at the present levels, the inflation projections would have to be changed. Thus, interest rate hike is possible only at beginning of next year at the earliest. As of today, Dec 1, Jan Frait and Michaela Erbenova term of office expires and they will be replaced by Vladimir Tomsik and Mojmir Hampl.

London-based bond dealers will be breathing a sigh of relief.

Qatar Telecom gets USD 2bn revolving credit facility. According to the Peninsula , Qatar Telecom (Qtel) is seeking international investment opportunities, and has announced that a syndicated arrangement for a 3-year USD 2bn revolving credit facility. The Mandated Lead Arrangers (MLAs) are Barclays Capital, The Royal Bank of Scotland, DBS Bank Ltd, Gulf International Bank BSC, Qatar National Bank SAQ and BNP Paribas. Barclays Capital and The Royal Bank of Scotland have been appointed as the book-runners, and Barclays Capital has been appointed as the Agent Bank. Qtel CEO Nasser Marafih has disclosed that the facility will be used mainly to finance acquisitions in the telecommunication sector.

One of the first things I was taught when I joined the market was to always be careful about what I said in public.

CNB Board expected to leave interest rates unchanged at November sitting. The Governing Board of the Czech National Bank (CNB) will not change its policy at the monetary session on Nov 30, and thus interest rates would remain unchanged with the basic repo at 2.5%, analysts polled by CTK agreed. Factors in favour of stable rates are the favourable inflationary developments with the latest consumer price inflation data being significantly below the CNB projection and target band thanks to oil prices standing at below their long-term average, and the continuing CZK strengthening. On the other hand, CNB might be urged to tighten its monetary stance given the higher interest rates in the euro area, higher consumer spending boosted by the wages growth and the still fast loans expansion. However, analysts expect CNB to increase rates at begining-2007 at the earliest; in 2007 at least two rates’ hikes are expected in response to accelerating inflation resulting from the introduction of higher excise taxes on cigarettes, speeding up domestic demand and credit expansion, as well as due to the big gap with the euro area interest rate levels.