"The situation is critical," Deputy Central Bank Chairman Sergei Shvetsov was quoted by Russian news agencies as saying. "We could not imagine what was going on in our worst dreams."
Surprise decision of the Central Bank to raise interest rates to 17 per cent compared to 10.5 per cent in the middle of the night on Tuesday were a desperate attempt to maintain the problem valyutu.Rubl fallen sharply in recent weeks, and is down more than 60 percent since January, due to lower prices oil, as well as the impact of Western sanctions imposed over Russia's participation in the crisis in Ukraine.
The collapse of the ruble stimulated ordinary Russians rush out and buy imported products such as refrigerators and cars, as inflation makes these items more expensive every day. It is also likely to pile pressure on President Vladimir Putin, despite its broad support.
The ruble is trading at 72 to the dollar on Tuesday evening in the afternoon - a modest improvement from before, when he hit 78.5 to the dollar.
Timothy Ash London Standard Bank described the fall of the ruble as "the most incredible collapse of the currency, I think I have ever seen in 17 years on the market, and 26 years, covering Russia."
"There is now a huge crisis of confidence in the Russian politicians in the eyes of the market," he said, adding that the decline is more surprising, given the hard currency reserves of Russia and the fact that he is working with a budget surplus.
Oksana Dmitrieva, deputy head of the Fair Russia faction in the Russian Duma, blamed the collapse of the ruble in the "chaotic and unprofessional" policy of the Central Bank. She said: "The government has no strategy" and maintains the ruble decline, "depends on official policy."
Central Bank interest rate movement Tuesday aimed at encouraging the development of currency traders to hold their rubles - it gives them a potentially greater returns, of course, compared to many other currencies such as the dollar, which returns the interest rates close to zero percent.
Depreciation of the ruble on Tuesday was caused by some kind of opaque trading on Monday with the participation of Rosneft, the company was seriously injured as a result of Western sanctions, which is run by a close ally of Putin, Igor Sechin.
Rosneft, Russia's largest oil company, raised 625 billion rubles ($ 10.9 billion at the time) in bonds on Friday with a yield lower than those for the equivalent of government securities. The Central Bank has approved securities as collateral in ruble auction on Monday, that is, the bondholders will have access to the Central Bank in cash.
Disclosure of movement of the bank shook markets Tuesday, because it reminded direct support of a company.
Sechin pleaded for help from the state to refinance debts of Rosneft, which has been hit with the Western sanctions and was cut off from Western debt markets.
The company, however, denied accusations that he was dumping rubles due to the economic situation, saying that it sells "only to attract financing for their projects in Russia." It promised that "not a single ruble ... will be used for the purchase of foreign currency."
State television, meanwhile, insisted that the weak ruble is actually good for the economy because it will stimulate domestic production and make exports cheaper.
Central Bank Chairman Nabiullina said the rate hike should stop inflation - higher borrowing costs effectively strangling economic activity, dampening downward pressure on prices. However, she acknowledged that the ruble will not immediately impact of rising interest rates, and added that it will take "some time" ruble before he finds fair value.
Other options available for the Russian authorities to stop the sale of rubles tide may be the introduction of capital controls or actual intervention in the markets - buy rubles naprimer.Tsentralny Bank intervened directly in the last few months.
Higher interest rates could eventually help the ruble, but it can cause a lot of difficulties in the economy, which is already heading for recession. Russian stocks were firm on Tuesday, though, with the benchmark by 2 per cent until the end of the day MICEX.
Neil scissors, chief economist for emerging markets in London Capital Economics, said the Central Bank rate hike will "further tightening of credit conditions for households and businesses and deeper recession in the real economy in 2015."
Given the huge Russia's dependence on oil revenues, the recent sharp fall in the price of oil hit the Russian economy. That is compounded by the fact that the Russian economy is not diversified enough to withstand the impact.
The average price of a barrel of oil fell below $ 56 from the year high of $ 107. Not long time ago government lowered its forecast for next year, predicting that the economy will plunge into recession. Most international forecasters think the Russian economy is set to contract next year.
Alexei Kudrin, Minister of Finance of Russia in 2000-2011, said on Twitter after the rate hikes that "the fall of the ruble and the stock market is not only a reaction to the low oil prices and sanctions, and (shows) distrust of the government's economic policy."
Kudrin said the rate hike "must be accompanied by government measures to increase investor confidence in the Russian economy." He did not say what steps he has performed.
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