Russia tells exporters to cut forex holdings
WITH its economy spiralling toward recession after Western sanctions and a dramatic fall in the price of oil, Russia took another step to shore up the value of the rouble, which has been one of the world’s worst-performing currencies this year.
The government instructed five of the country’s biggest statecontrolled exporters to reduce their foreign currency assets to October levels and to not raise them again until March. The companies targeted were gas giant Gazprom, oil companies Rosneft and Zarubezhneft and diamond producers Alrosa and Kristall.
The rouble was steady as it has been for the past few trading sessions, floating around the 55 mark against the dollar, a big gain on last week when the rouble plunged at one point to near 80 against the dollar.
With Russia heavily dependent on imports, jittery consumers rushed to buy cars and emptied shelves at electronics and home appliances stores to pre-empt price rises. Others besieged bank offices to withdraw their deposits and buy dollars or euros— a panic that raised the threat of a fullfledged banking crisis if it’s not contained quickly.
John J Kirton, professor of political science at the University of Toronto, said the EU economies would face a drop in their exports to Russia and could also be hit by its banking crisis.
‘‘I think there is a clear and present danger, today or tomorrow, because of a financial crisis that is already under way in Russia and that is affecting Europe in ways we don’t yet understand,’’ he said.
In response to the falling rouble, Russia’s central bank last week increased its key interest rate to a whopping 17 per cent. Though that may help ease the selling pressure on the rouble by encouraging traders to hold it in anticipation of big returns, it is going to hobble Russian businesses and households if maintained for too long.