by Edward Hugh: Barcelonabr /br /br /The Russian ruble strengthened the most in more than three months against the dollar yesterday (gaining 1.7 percent to 32.2247 per dollar at one point) as oil rebounded above $60 a barrel and OAO Sberbank reported better-than-expected earnings. Sberbank shares jumped 5.1 percent after first-quarter net income turned out to be above analyst estimates. But the rise was also helped by the fact that Russia’s central bank spent approximately $2 billion from reserves to try to stop the ruble from falling yesterday, taking central bank reserve spending over the two working days since they lowered interest rates half a percantage point on Friday to around $4 billion, a href="http://www.bloomberg.com/apps/news?pid=newsarchiveamp;sid=aTqgrOY1vdEo"according to reports in the newspaper Kommersant/a.br /br /Russia’s central bank cut its main interest rates for the fourth time in less than three months at the end of last week after the government estimated the ...

by Edward Hugh: Barcelonabr /br /According to Deputy Economic Development Minister Andrei Klepach last week, Russia's economy shrank by 7 percent year on year in the first quarter of 2009, a staggering turnaround for an economy which has just enjoyed eight years of solid oil-fueled growth.br /br /"These figures are worse than we expected," Klepach said at a press conference in Kiev,citing preliminary figures. Klepach also stated that net capital outflows reached $33 billion in the first quarter of 2009, following record outflows of $130 billion in the second half of last year.br /br /pa href="http://1.bp.blogspot.com/_ngczZkrw340/SdsTJmo57XI/AAAAAAAANbI/gYR1beR2NiI/s1600-h/russia+gdp.png"img id="BLOGGER_PHOTO_ID_5321868440380239218" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 229px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SdsTJmo57XI/AAAAAAAANbI/gYR1beR2NiI/s400/russia+gdp.png" border="0" //abr /br /The Russian State Statistics Service have also released official gross domestic product figures for the fourth quarter of 2008. GDP was up 1.2 percent year on year, the worst reading for any quarter since ...

Russia's government plans to lend the country's biggest banks 950 billion rubles ($36 billion) for at least five years in an attempt to unfreeze credit markets, according to a new plan announced by President Dmitry Medvedev this morning. State-run OAO Sberbank and VTB Group, will get 500 billion rubles and 200 billion rubles respectively.Some 450 billion roubles ($17.19 billion) of the 950 billion rouble subordinate loans package for banks will come from one of the National Wealth Funds according to Finance Minister Alexei Kudrin said on Tuesday. Russia's two oil wealth funds totalled $189.7 billion as of Oct. 1.The Russian authorities, who are currently grappling with the worst financial crisis since the government's debt default in 1998, have already pledged more than $150 billion for banks and companies through loans and tax benefits (see details in this post here). Stocks rose ...

by Edward Hugh: BarcelonaWell the action in Russia this week has moved on slightly, and the damage has started to spread from pressure on the domestic stock market (accompanied by capital flight) to the real economy - via a very rapid tightening in credit conditions for Russian domestic users. We are also seeing a rapid slowdown in Russian manufacturing industry as internal demand slows while the inflation-driven decline in cost competitiveness continues to make imported products (where available) an attractive alternative to the home produced variant.Emerging-market bonds have been generally falling this week as the U.S. Senate's approval of a $700 billion bank rescue package did little to revive demand for riskier debt, and Russia has, unsurprisingly, been among the worst affected. The extra yield investors demand to own developing-nation bonds rather than U.S. Treasuries rose 8 basis points yestreday to 4.14 percentage points after widening ...

by Edward Hugh: BarcelonaWell the action in Russia this week has moved on slightly, and the damage has started to spread from pressure on the domestic stock market (accompanied by capital flight) to the real economy - via a very rapid tightening in credit conditions for Russian domestic users. We are also seeing a rapid slowdown in Russian manufacturing industry as internal demand slows while the inflation-driven decline in cost competitiveness continues to make imported products (where available) an attractive alternative to the home produced variant.Emerging-market bonds have been generally falling this week as the U.S. Senate's approval of a $700 billion bank rescue package did little to revive demand for riskier debt, and Russia has, unsurprisingly, been among the worst affected. The extra yield investors demand to own developing-nation bonds rather than U.S. Treasuries rose 8 basis points yestreday to 4.14 percentage points after widening ...

The outlook rating for Russia's banking system was changed today from "stable" to "negative" by Moody's Investors Services. The Banking System Outlook Report (published today) clited slowing asset growth, higher inflation, the slump in equities and funds leaving the country, all of which could result in deteriorating fundamentals for banks, according to the credit rating agency. Moody's thus joins the other two large credit rating agencies - Fitch Ratings and Standard and Poor's in downgrading at least a part of the Russian financial system. Fitch said in a report last week that Russian real estate and construction companies were the most at risk as domestic and international banks curb lending, while Russia's credit outlook was cut to ``stable'' from ``positive'' at Standard & Poor's on Sept. 19. S&P's cited the growing pressure on Russian authorities to spend resources from the National Wealth Fund, undermining the nation's ...

Russian stock exchanges had to halted trading again today (Friday) for the fourth successive day running, but this time the explanation was a rather different one - since stocks rapidly surged higher, following President Medvedev's announcement yesterday that the government was going to inject funds into the purchase of Russian stocks. Exchanges suspended trading after just hours of trading Friday after shares on the benchmark RTS and MICEX indexes shot up by 20 percent and 26.3 percent, respectively. Trading was only temporarily suspended and was expected to resume later today.Stocks bounced back after the government rushed through a series of emergency measures — amounting to some $120 billion worth of relief — in the shape of increased liquidity to the banking sector and share purchases on the domestic markets. In fact Russia's RTS Index, which had previously been the best global stock performer this decade, had turned ...

Russian stock exchanges had to halted trading again today (Friday) for the fourth successive day running, but this time the explanation was a rather different one - since stocks rapidly surged higher, following President Medvedev's announcement yesterday that the government was going to inject funds into the purchase of Russian stocks. Exchanges suspended trading after just hours of trading Friday after shares on the benchmark RTS and MICEX indexes shot up by 20 percent and 26.3 percent, respectively. Trading was only temporarily suspended and was expected to resume later today.Stocks bounced back after the government rushed through a series of emergency measures — amounting to some $120 billion worth of relief — in the shape of increased liquidity to the banking sector and share purchases on the domestic markets. In fact Russia's RTS Index, which had previously been the best global stock performer this decade, had turned ...

Russia's President Dmitry Medvedev today pledged $20 billion in financial support for the Russian stock market and cut oil taxes in an attempt to bring a halt to what has now become Russia's worst financial crisis in a decade. Medvedev took this action in order to try to lay the basis for a reopening of Russia's bourses tomorrow, following three days of irregular operation on the back of a 25% drop in the Micex Index. Following the announcement Russian shares traded in London surged and the interbank lending rate plunged.The announcement followed a meeting between Medvedev, the central bank Chairman Sergey Ignatiev and Russia's Finance Minister Alexei Kudrin. Ignatiev also announced that central bank reserve requirements for Russia's banks would be eased in an attempt to provide more liquidity.The tax cut for oil exports will come into effect on Oct. 1 and save producers and refiners ...

While U.S. financial turmoil has seeped into virtually every global market, Russia has been devastated, as the country’s largest stock exchanges, the MICEX and RTS, have suffered their biggest losses since the 1998 financial crisis. However, Moscow only has itself to blame after heavy-handed economic, political, and military tactics scared away the foreign investments it didn’t oust directly. Regulators suspended trading on both the MICEX and RTS for the second day in a row yesterday (Wednesday), after the nation’s two biggest exchanges suffered their worst losses in nearly a decade. The benchmark MICEX index tumbled 10% yesterday morning, extending a three-day decline that’s eradicated 25% of its value. The index plunged 17.5% Tuesday, its worst one-day decline since 1998. The dollar-denominated RTS index was down more than 8% when trading halted yesterday, after dropping 11.5% the day prior. The RTS has ...