By Edward Hugh: Barcelonabr /br /Russia's foreign-exchange reserves have been now been declining very rapidly since mid August, and as the money goes so does the faith that the large stock of reserves the country built up during the boom times would be sufficient to see them through any downturn in energy prices. As the money leaves, so it seems does the decade of economic growth and stability which they symbolised. Indeed so rapid has been the decline that Russia's international reserves, which are the third-biggest after those of China and Japan, have now fallen $161 billion, or 27% percent, since 8 August last, and decreased by $17.9 billion to $437 billion in the week to 5 December. Investors have now pulled $211 billion out of the country since August, according to estimates by BNP Paribas.br /br /br /pa href="http://1.bp.blogspot.com/_ngczZkrw340/SUbQptNe4tI/AAAAAAAALyE/K0xlBOy3AlA/s1600-h/russia+GDP.png"img id="BLOGGER_PHOTO_ID_5280137028067844818" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: ...

Russia's foreign-exchange reserves have been declining rapidly since mid August, and with the money which is flowing out may go almost a decade of economic stability which they brought. Russia's international reserves, which are the third-biggest after China's and Japan's, have now fallen $161 billion, or 27% percent, since 8 August, and decreased by $17.9 billion to $437 billion in the week to 5 December. Investors have pulled $211 billion out of the country since August, according to BNP Paribas.br /br /br /But just how difficult this is proving to be was illustrated only this morning as Russia’s central bank devalued the ruble for the second time in a only a week, and the ruble fell as much as 1.3 percent (to a four-year low of 37.5015 per euro) following the decision by Bank Rossii to widen the trading band against the basket of dollars and euros used by the ...

Financial NewsJason Corcoran in Moscow and Harry Wilson17 Nov 2008 Moscow-based investment bankers are at the sharp end of job cutsRussian index slumpsIt seems like a different age, but it was only recently that Moscow-based investment bankers had firms fighting to secure their services and could command pay packages commensurate with demand.Senior Moscow-based bankers and those covering the Russian markets asked for and got lucrative pay deals as local brokers and large international investment banks fought a hiring war to build their businesses in the country.Guaranteed packages in excess of $10m (€7.8m) were not unheard of and even junior staff with experience of the Russian markets received $1m guarantees to join rivals.In early 2007, Russian investment bank Alfa-Bank recruited the head of UBS’ Moscow office Ed Kaufman for a ...

Plunging crude oil prices and currency weakness are creating a crisis in Russia that makes the US look like a boomtown. Financial turmoil is mounting pressure on the Kremlin, says Andrew Snyder. And the resulting desperation could lead to some interesting profit plays.

This from Today’s Financial News:

If you think the situation is bleak here in the United States, you would wet your pants if you took an in-depth look at Russia’s economy.

Its stock market seems to be closed more than it is open. Its currency is plunging. And its government is running out of options and money to fix the situation. Russia makes America look like we are sitting atop a booming economy.

Putin’s downturn could lead to some easy profit potential. But more on that in a minute.

For nearly all of the last decade, Russia’s economy has been based on the country’s ability to sell its natural resources to Europe

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Emerging markets look like they are in for another rough week, Russia included. The Financial Times is reporting that the rating agency Fitch has downgraded the credit rankings of Bulgaria, Hungary, Kazakhstan and Romania, and slashed the long-term currency outlook from stable to negative for South Korea, Mexico, Russia and South Africa. It seems that the market is unimpressed by the Russian government's efforts to handle the crisis, which consists of Dmitry Medvedev calling for the extension of term limits and authorizing the police to "crush" any crisis-related protests. It looks like the halcyon days of profitable authoritarianism may be drawing to a close...

TODAY: Obama not yet committed to missile defense plan, giving Kremlin hope of more flexible relationship; Medvedev and Obama speak; Kremlin to all but ignore Bush administration; Russia to soften trade measures to smooth path to WTO; Russia and Venezuela form development bank; OSCE monitors blame Georgia; Communist marches, anti-corruption, presidential pardons. Foreign Minister Sergei Lavrov has voiced his optimism on foreign policy relations under Barack Obama, amidst news that Dmitry Medvedev and the new president-elect held an amicable telephone conversation over the weekend. The Russian government reportedly believes that the new US administration could be persuaded to abandon plans to station a missile defense shield in Poland, and reports indicate that Obama has not given Poland a definitive answer on the shield. Despite a meeting between Lavrov and Condoleezza Rice over the weekend, the ...

[In September, the Russian academic Boris Sokolov was fired from his university as well as from a newspaper where he contributed a regular column after writing materials questioning the Russian government's position on events in Georgia. Our Russia correspondent Grigory Pasko catches up with Sokolov to discuss this and other topics. - Editor] Historian Boris Sokolov: "Not even one great politician…" By Grigory Pasko Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда. B. Sokolov - author of more than 50 books on fatherland history and philology, including of the encyclopedias Bulgakov and Gogol, Secrets of the Second world [war], Secrets of the Finnish war, Hundred great wars, Hundred great politicians, Occupation: truth and myth, Russia: Successes of the past century (in co-authorship) and others. I recently had a chance to meet with Boris Vadimovich to discuss topics of modern life in Russia. I offer to your ...

Jason Bush at BusinessWeek has a very interesting piece today: Mysterious lawsuits targeting prominent financial institutions could become the latest worry for foreign investors in Russia. Earlier this year, Hermitage Capital Management, an investment fund managed by British bank HSBC (HBC), claimed that three of its subsidiaries had been besieged by Russian fraud artists. Hermitage alleged in public statements that a series of bogus suits, based on fake contracts to sell shares, had been filed against the units as part of a scheme to seize ownership of the subsidiaries and reclaim $230 million in taxes previously paid by Hermitage to the Russian government. Russian authorities are investigating these allegations.

Today the Wall Street Journal is reporting that the British bank Barclays is looking to raise some $10 billion in capital from Kremlin-controlled banks Sberbank and VTB. The bank has studiously avoided any government bailout plan in the UK, which could result in restrictions on dividend payments and state influence over board seats. However it seems unclear how Barclays feels about Russian government influence over their operations. So what has led this fine British financial institution to the doors of the Kremlin? Barclays CEO John Varley has been strenuous about his opposition to state intervention in the banks, commenting that "Those who have government shareholdings will be more constrained in their strategic and operational flexibility than those who are independent. (...) There will be some people in the employment market in the United Kingdom who will make the ...

The attentive reader may recall that Sergei Lavrov got a little bit prickly in response to U.S. sanctions on the state arms exporter Rosoboronexport. During yesterday's press debriefing at the State Department, one journalist got a brief response out of Sean McCormack, which shows that the U.S. is getting bit annoyed with Russia's insistence that its helping out on Iran is seen as "a favor" rather than a mutual interest. He's got a point. QUESTION: Sean, kind of old business from Friday. Sergey Lavrov expressed some irritation about the sanctions that the United States imposed against that Russian export firm Rosoboronexport or whatever. MR. MCCORMACK: Yeah. QUESTION: And he said that it was a case of unilateralism vis-à-vis Iran and that this will cause Russia to sort of approach the P5+1 process with diminished zeal. And I was wondering, have they communicated that to you? MR. MCCORMACK: I don’t ...