'Funding problems are increasing dramatically. We think Russia is now flirting with systemic problems,' said Danske Bank
By Ambrose Evans-Pritchard
8:58PM GMT 01 Dec 2014
The currency has been in freefall since Saudi Arabia and the Gulf states vetoed calls by weaker Opec members for a cut in crude oil output, a move viewed by the Kremlin as a strategic attack on Russia.
A fresh plunge in Brent prices to a five-year low of $67.50 a barrel on Monday caused the dam to break, triggering a 9pc slide in the rouble in a matter of hours.
Analysts said it took huge intervention by the Russian central bank to stop the rout and stablize the rouble at 52.07 to the dollar. “They must have spent billions,” said Tim Ash, at Standard Bank.
It is extremely rare for a major country to collapse in this fashion, and the trauma is likely to have political consequences. "This has become disorderly. There are no real buyers of the rouble. We know that voices close to president Vladimir Putin want capital controls, and we cannot rule this out," said Lars Christensen, at Danske Bank.
"Funding problems are increasing dramatically. We think Russia is now flirting with systemic problems,” he added.
Some Russian banks have already started limiting withdrawals of dollars and euros to $10,000, an implicit lockdown for big depositors.
Russian premier Dmitry Medvedev said 10 days ago that capital controls are out of the question.
“The government, myself, my colleagues and the central bank have repeatedly stated that we are not going to impose any special restrictions on capital flows,” he said.
Ksenia Yudaeva, the central bank’s deputy governor, said the authorities are battening down the hatches for a “$60 oil scenario” lasting deep into next year. “A long decline is highly probable,” she said.
Russia has lost its ranking as the world’s eighth biggest economy, shrinking in just nine months from a $2.1 trillion petro-giant to a mid-size player comparable with Korea or Spain.
In a further setback, Mr Putin gave the clearest signal yet that the South Stream gas pipeline - intended to supply Europe without going through Ukraine - may never be built. “If Europe does not want to carry it out, then it will not be carried out,” he said.
Oil and gas provide two-thirds of Russia’s exports and cover half of its fiscal revenues, a classic case of the “Dutch Disease” that leaves the country highly exposed to the ups and down of the commodity cycle.
Rouble against the dollar since December 2012
Protracted slumps in crude prices crippled the Soviet Union in the late 1980s, and caused Russia to go bankrupt in the late-1990s. “The rouble will not stabilize until oil does,” said Kingsmill Bond, at Sberbank.
The bank said Russia faces a mounting deficit on its capital account. The country is no longer generating a big enough trade surplus to cover capital outflows. Sberbank warned that reserves are “likely” to fall to levels that ultimately require capital controls, unless Western sanctions are lifted.
While Russia has $420bn of foreign reserves, this war chest is not as a large as it seems for a country with chronic capital outflows that relies heavily on foreign funding. Lubomir Mitov, from the Institute of International Finance, said investors may start to fret about reserve cover if the figure falls to $330bn.
The rouble's slide has led to fury in the Duma, where populist politician Evgeny Fedorov has called for a criminal investigation of the central bank. Critics say the institution had been taken over by "feminist liberals" and is a tool of the International Monetary Fund. The office of the Russia general prosecutor said on Monday it was opening a probe.
"Funding problems are increasing dramatically. We think Russia is now flirting with systemic problems,” he added.
Some Russian banks have already started limiting withdrawals of dollars and euros to $10,000, an implicit lockdown for big depositors.
Russian premier Dmitry Medvedev said 10 days ago that capital controls are out of the question.
“The government, myself, my colleagues and the central bank have repeatedly stated that we are not going to impose any special restrictions on capital flows,” he said.
Ksenia Yudaeva, the central bank’s deputy governor, said the authorities are battening down the hatches for a “$60 oil scenario” lasting deep into next year. “A long decline is highly probable,” she said.
Russia has lost its ranking as the world’s eighth biggest economy, shrinking in just nine months from a $2.1 trillion petro-giant to a mid-size player comparable with Korea or Spain.
In a further setback, Mr Putin gave the clearest signal yet that the South Stream gas pipeline - intended to supply Europe without going through Ukraine - may never be built. “If Europe does not want to carry it out, then it will not be carried out,” he said.
Oil and gas provide two-thirds of Russia’s exports and cover half of its fiscal revenues, a classic case of the “Dutch Disease” that leaves the country highly exposed to the ups and down of the commodity cycle.
Rouble against the dollar since December 2012
Protracted slumps in crude prices crippled the Soviet Union in the late 1980s, and caused Russia to go bankrupt in the late-1990s. “The rouble will not stabilize until oil does,” said Kingsmill Bond, at Sberbank.
The bank said Russia faces a mounting deficit on its capital account. The country is no longer generating a big enough trade surplus to cover capital outflows. Sberbank warned that reserves are “likely” to fall to levels that ultimately require capital controls, unless Western sanctions are lifted.
While Russia has $420bn of foreign reserves, this war chest is not as a large as it seems for a country with chronic capital outflows that relies heavily on foreign funding. Lubomir Mitov, from the Institute of International Finance, said investors may start to fret about reserve cover if the figure falls to $330bn.
The rouble's slide has led to fury in the Duma, where populist politician Evgeny Fedorov has called for a criminal investigation of the central bank. Critics say the institution had been taken over by "feminist liberals" and is a tool of the International Monetary Fund. The office of the Russia general prosecutor said on Monday it was opening a probe.
0 comments:
Publicar un comentario