Fear of failure as 1998: Moscow fights against ruble panic – n-tv.de NEWS

Fear of failure as 1998: Moscow fights against ruble panic – n-tv.de NEWS

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 Tuesday, December 16, 2014

 
 
 

 
 Moscow is fighting with the markets in the next round: After the rate hike fizzled there should be more steps. The Russian stock market experienced the worst crash in its history, the markets are already a bust by Russia.
 

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Kremlin and Russian central brace themselves by all means against the dramatic fall of the ruble, which evokes the risk of another state bankruptcy of the vast empire. Fed chief Elvira Nabiullina insured to act in solidarity with the government more against the free fall of the ruble. “Following the decision to raise interest rates will follow on the part of the central bank further steps,” said the deputy governor Sergei Schwetsow. The situation was difficult and resemble in some ways the crisis of 2008.

The Russian currency stabilized then something for a dollar but are still 72 rubles due, in the meantime, the US currency was even good 79 rubles increased. A cost EUR times even more than 100 rubles. At night, the central bank cut rates dramatically increased by 6.5 per cent to 17 per cent, to stop the ruble slide. But the interest desperate attack helped only briefly and fizzled. In relation to their intraday high of 58 rubles per dollar has lost so in just one day, almost a quarter of its value the Russian currency. Since the beginning of the ruble slumped by nearly half.

“People are highly nervous,” said one trader. “What’s going on also on the Russian markets of the Rat Race.” In Moscow, the leading index fell by almost 20 percent – the biggest one-day loss in history. Among investors, the assessment is spreading that an interest rate of 17 percent will not be enough to compensate for the massive pressure exerted by falling oil prices and Western sanctions against Russia and the ruble. “In such a situation, the central bank in an emerging country must necessarily defeat the market, in addition still sold dollars on a large scale by” wrote Luis Costa, an analyst at Citigroup.

capital controls threaten

Russia still sitting on foreign exchange reserves of 416 billion and is dissavers to stabilize its currency probably appreciably. Therefore, votes already are being heard that warn of parallels with the ruble crisis of 1998: At that time Russia was insolvent and could be maintained only with billions in aid from the IMF and the World Bank on water. “The central bank will find it very difficult to stabilize the ruble, as long as the oil price decline continues,” said economist Vladimir Miklaschewsky by Danske Bank. Analysts spoke of panic.

Federal Reserve chief Nabiullina played down the situation on Tuesday. It will take time until the markets stabilized after the rate hike, she said. At the same time, it dismissed the claims of some politicians after the introduction of capital controls. Economists are already warning of the central bank was a risk of loss of control over the foreign exchange market. May remain in the end no alternative but to control the ruble trading stronger. “Capital controls as a policy measure may not be off the table,” wrote about Citibank analyst Costa.

“The central bank should now speak instead of keeping quiet,” says forex strategist Alexei Kulakov of Promsvyazbank. “The rate hike is good, but too late.” If the step already come last Thursday and was accompanied by a series of interventions, this would calm the markets.

Moscow plays bankruptcy risk down

The central bank takes its recent rate hike at the same time , the recession going to get worse in purchasing. For high interest rates make loans expensive and thus slow down the economy. The decline of the Russian currency had accelerated as a result of the Ukraine crisis in the wake of Western sanctions. The economy has collapsed, investors withdrew last billions of dollars from. Also, the falling price of oil has torn a hole in the budget of the resource-rich country. The Russian economy could, according to the Moscow Central shrink by around 4.5 percent next year, the price of oil should level off at 60 dollars per barrel.

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The price of a barrel of Brent crude fell on Tuesday for the first time in five years under the 60-dollar mark. Currently only have $ 59.18 to be paid after the figure was $ 63.25 in the head the day before. Russia is economically dependent on oil and gas expor ts.

But Moscow makes every effort to dispel concerns about the threat of bankruptcy. Have Russian banks because of Western sanctions on the train Ukraine crisis trouble getting hold of sufficient foreign exchange to pay their dollar debts. Foreign investors, in turn, are holding back because the development of the situation is unclear.

Nabiullina came into the interview to radio station Rossiya-24 counter fears that Russian companies could no longer pay its debts abroad. In the financial markets at the same time, tension is mounting. The protection of a ten-million dollar package of Russian bonds against default rose in price on Tuesday at 34,000 to $ 581,000, as the data provider Markit announced. This is the highest level in five and a half years.

  Source: n-tv.de