blockquote“Cutting rates by 50 basis points here and there is not going really diminish the appeal of the ruble,” said Manik Narain, an emerging markets strategist at Standard Chartered Bank Plc in London. “In terms of nominal interest rates Russia (at 9% as of 24 November) is still offering the highest yields in the emerging market space and in an environment where oil prices are remaining relatively well supported we think that the ruble will continue to be seen as an attractive way to position for global recovery,” /blockquotepbr /The world's central banks are having a hard time of it these days, having just gotten through the worst banking and financial crisis in living memory they now face a growing dilema between continuing to give support to the developed economies (which are yet to recover from those early hammer blows) and the danger of creating fresh global asset price bubbles ...

Although some parties may be pleading its case, a Nomura analyst says that Russia will not need to fall back on a second ruble devaluation, Bloomberg reports.  Central Bank Chairman Sergey Ignatiev has suggested that policy makers may decrease the bank's benchmark interest rates as early as this month as the ruble has stabilized and inflation appears to have lessened.  The submitting of the budget, which usually opens the fall session of the state duma, will be delayed until October 1st due to disagreements over its terms.  The Moscow Times relays Communist Deputy Sergei Obukhov's complaints that the budget will be hurried through without deputies being correctly informed.  With demand for cars plummeting, Renault plans to create a series of car part manufacturers, ready for when the market rebounds.  Sberbank has announced a net profit of $194 million in ...

Russian manufacturing contracted at its second-fastest pace since 1998 in January as companies continued cutting production and jobs amid collapsing demand at home and abroad, according to the latest manufacturing PMI report from Markit Economics and VTB Capital. VTB’s Purchasing Managers’ Index rose to 34.4 from December’s record low of 33.8. The length of the manufacturing contraction is now just one month short of the slump that occurred during the 1998 economic collapse. Basically we still need to see the services PMI (out later this week), but this looks to me (on a rough calculation basis) like a 1% quarter on quarter GDP contraction rate, or an annual rate of GDP contraction of 4% in January. br /br /a href=”http://1.bp.blogspot.com/_ngczZkrw340/SYbATcp7ElI/AAAAAAAAMgM/WEmIrUSLxIs/s1600-h/russia+man+pmi.png”img id=”BLOGGER_PHOTO_ID_5298133451990045266″ style=”DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 244px; TEXT-ALIGN: center” alt=”" src=”http://1.bp.blogspot.com/_ngczZkrw340/SYbATcp7ElI/AAAAAAAAMgM/WEmIrUSLxIs/s400/russia+man+pmi.png” border=”0″ //abr /div/divbr /br /blockquote“There were numerous reports from panelists that the …

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 …

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 …

We all knew this was coming, and we knew that it would be painful. After Central Bank Chairman Sergey Ignatiev indicated during a televised address yesterday that authorities would finally allow the value of the ruble to slip against its mixed basket of currencies (55% dollars, 45% euros), the markets have reacted rather negatively, with the MICEX dropping 10%. Chris Weafer tells Bloomberg that "They're going to move the line in the sand back a little bit, where they hope they can defend it. If people start to lose confidence in the banking system, we could have a massive run on the banks as we saw twice in the nineties, and then the game is up.'' Most analysts expect that Russia is still holding enough FOREX to keep the ruble from collapsing, but will likely allow a gradual decline until oil prices bounce back.

Russia's currency reserves, the third-biggest in the world, are falling steadily as tumbling oil prices and an exodus of capital are piling the pressure on the central bank and government policymakers to accept a devaluation in the ruble. Oil prices which are now down 60% from their july peak, slowing economic growth and increasing investor concern are steadily draining Russia's foreign exchange reserves, which fell 19 percent (to $484.6 billion) in the 12 weeks through Oct. 31. This is down from $598.1 billion in the week before the invasion of Southern Ossetia.Russia had been using the reserves to try and contain the upward movement in the ruble was thought to present a threat to the competitiveness of exports. But resistance is now becoming increasingly difficult in the fact of a 13 percent drop against the dollar since August 1.Bank Rossii began managing the ruble's exchange rate ...

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 ...