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Vienna / Moscow “The fact that such a thing would have happened, not even occurred to us a year ago in nightmare”: If even a central banker says something so, then the situation is so dramatic that there is nothing to gloss over. This enabled the Bank of Russia Sergei Shvetsov Vice-with its alarming message on Tuesday hardly add fuel to the fire. Because the house was burning brightly: In a dramatic action, the central bank had raised its key interest rate drastically overnight: from 10.5 to 17 percent. Higher interest rates should make investments in rubles attractive and thus stop capital flight and price decline. This was achieved for just eleven minutes. Then the Russian currency plummeted to new lows against the dollar, euro and gold
The Russian stock market took the ruble to its decline. The Moscow stock market crashed on Tuesday by more than 16 percent. For the benchmark index RTS it was the biggest one-day loss in history. He is now at the level of the financial crisis of 2008. Prior to Vienna, the quake felt: the share of Raiffeisen Bank International, which generated a large part of their income in Russia, lost up to ten percent. The stock hit an all time low.
Analysts spoke of a market panic. Russian Prime Minister Medvedev convened a crisis meeting in the Kremlin. Already some call the dark memories of the ruble crisis of 1998. At that time, Russia was insolvent and could only be maintained by financial assistance from the IMF and World Bank Water
The main reasons for the pressure on the ruble are obvious: drastically likeWorld oil price – minus 50 percent since the summer – always brings less foreign currency in a country whose economic strength is based almost entirely on his wealth of raw materials. Then there are the geopolitical tensions and the sanctions imposed by the West against Russia. He had provoked these sanctions, President Putin was yesterday almost the only one who remained silent about it all.
Only in the course of the week will show whether the rate hike the decline of the ruble still can stop. Still, the central bank had enough “firepower” to add further steps to Moscow – even if the total value of Russia’s gold and currency reserves fell from around 500 to around $ 400 billion since the beginning of the year. Russia will have to take measures to ensure that higher interest rates not extremely expensive loans in the country – which would weaken the economy and strengthen further the risk of recession. To stop the massive flight of money, would still eligible capital controls. However, as a last resort – because just because the Russian Central Bank so far is means to “orthodox”, ie on interest rate moves, she earns respect on the part of analysts
For the Russian banks, the situation is getting worse.. Until the end of 2015, they have to pay back debts in foreign currencies with a total value of 135 billion dollars – what they expected in rubles always costs more. Nevertheless, the analysts at Goldman Sachs spread doom and gloom do not want to connect: “While the sanctions were initially secure an important factor in the ruble weakness, we believe that there is now sufficient foreign exchange in Russia are available. Unlike 2008, the banking system is now a major international creditors and the companies keep more cash in foreign currencies than necessary to service the debt, “write the analysts.
At the same time solves the massive devaluation of the ruble a buying frenzy from within Russia. The reported from Moscow rush to home appliances already resembles hyperinflation of the past, as we have seen in Argentina and Belarus. This means that not only the foreign investors, including the Russians continue to bet on a devaluation of the ruble and spend their money. Russia has, ironically, “reached” what the Japanese government wants intimately. spending spree thanks to massive inflation
(“Die Presse”, print edition of . 17:12 2014)
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