Home | Economy | Russia Sold A Bunch Of Foreign Cash Reserves To Boost The Ruble
In this Tuesday, Dec. 16, 2014 file photo, a man walks by a sign advertising currencies of an exchange office in Moscow, Russia.

Russia Sold A Bunch Of Foreign Cash Reserves To Boost The Ruble

The rouble has rebounded to its strongest level in more than two-weeks, propelled by soft government controls of the currency. Large state-controlled exporters have been forced to intervene in foreign exchange markets to the tune of $1bn (£640m) a day, according to anonymous sources cited by Russian daily Kommersant. The newspaper reported that Dmitry Medvedev, the Russian Prime Minister, signed an order to this effect on December 17. The five companies involved – spanning oil and gas and diamond exporters – received the order at the end of last week, it reported. A form of soft capital controls, these measures are thought to explain the rouble’s strength in recent days. Having rallied for three straight sessions, a dollar now buys just 52 roubles, down from the 79 it would have purchased on December 16. The rouble has been hampered by a series of sanctions over the Ukraine crisis, and the falling value of oil, on which the Russian economy has become reliant. Neil Shearing, chief emerging markets economist at Capital Economics, has warned that if the government turned to stringent capital controls, these “would eliminate any remaining credibility that Russia has in international markets”. The news came as a Bloomberg survey of economists judged the risk of recession next year at a record high. More than nine in every ten respondents said that they expect the Russi an economy to fall into a technical recession within the next 12 months, up from three-quarters of economists polled a month ago. The gloomy prognosis mirrors comments made by Alexei Kudrin, a former finance minister, who warned on Monday that Russia is now facing a “full-blown economic crisis”. Whereas oil was trading at around $110 per barrel in June, a barrel of Brent crude now costs around $60. As the price of oil has fallen, the room for further sanctions against Russia has risen, as the consequences of Mr Putin turning off oil exports in response would be more muted. The proportion of economists polled by Bloomberg that expect the US to implement direct economic sanctions against Russia, as opposed to those targeted at companies and individuals, rose from 29pc to 35pc.

Business Insider

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