Russian industrial production dropped sharply again in December – by the most since at least 2003. Output was down 10.3 percent following an 8.7 percent fall in November, according to data from the Federal Statistics Service announced yesterday (Thursday) by central Bank Chairman Sergey Ignatiev. Output growth for the year was 2.1 percent, the slowest since at least 1999. br /br /a href=”http://4.bp.blogspot.com/_ngczZkrw340/SXnHod1_lII/AAAAAAAAMVY/OmOY6oKT5Zk/s1600-h/russia+manufacturing.png”img style=”display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 237px;” src=”http://4.bp.blogspot.com/_ngczZkrw340/SXnHod1_lII/AAAAAAAAMVY/OmOY6oKT5Zk/s400/russia+manufacturing.png” border=”0″ alt=”"id=”BLOGGER_PHOTO_ID_5294482334970516610″ //abr /br /Manufacturing fell an annual 13.2 percent in December, compared with a decline of 10.3 percent in November, as steel-pipe production dropped an annual 35.3 percent and coking coal output plunged 44.2 percent. Truck production plummeted 67.1 percent. br /br /This data is not surprising, and only confirms what we have been seeing in the VTB PMI. The next interesting data appointment will be on 2 February, when we should get to see what happened in January.br /br /br /strongReserves Drop Sharply/strongbr /br /Russia’s international reserves fell $30.3 billion last week, the second-biggest drop on record, as the central bank accelerated the rate of the ruble devaluation and sold increasing quantities of foreign currency in an attempt to manage the pace of the decline. Russia’s reserves have now fallen 34 percent from the record high of $598.1 billion in August while the ruble has fallen 29 percent against the dollar over the same period. br /br /Some of last weeks decline can be attributed to the dollar’s 1.5 percent gain against the euro in the week ended January 16, since this means a fall in the dollar value of the other currencies in the reserves. Evgeny Nadorshin, senior economist at Moscow’s Trust Investment Bank, estimates that about $18.3 billion of the drop can be accounted for by central bank interventions last week. br /br /(The reserves are made up of 44 percent euros, 45 percent dollars, 10 percent pounds sterling and 1 percent yen). br /br /The Ruble continued to fall today (Friday) after the central bank announced last night that it was “finished” with its gradual devaluation of the ruble and was going to let “market factors” help determine the level of the currency. The bank set the weakest end of the currency’s trading range against a target basket of dollars and euros at 41 as of today, or 36 per dollar, at a USD of around 1.3 to the euro. Bank Rossii has now widened the currency trading band 20 times since mid-November as it seeks to rebalance Russia’s economy amid plunging oil prices and the global financial crisis. br /br /Following yesterdays announcement the ruble fell again this morning, dropping 1.5 percent (to 33.1073 per dollar), extending this weeks decline to 1.8 percent.br /br /blockquote“This is an open invitation for speculators to test how quickly the ruble can get to 41,” said Ulrich Leuchtmann, head of currency research in Frankfurt at Commerzbank AG, which ranks itself among the biggest 10 traders of the ruble worldwide. “They wanted to decrease speculative pressures, but now they’ve given the market a good reason to increase them.” /blockquote

Last 5 posts by Edward Hugh

• Global Manufacturing, France Outperforms, As Spain Continues To Flounder - November 3rd, 2009
• A New Spectre Is Haunting Europe, A Spanish One - October 31st, 2009
• Beyond The Consensus On European Bank Credit - October 27th, 2009
• The French Rebound Continues In October While Germany Moves Sideways - October 27th, 2009
• The French Rebound Continues In October While Germany Moves Sideways - October 27th, 2009