Russian economy shrinks 4.6% as oil slump risks deeper recession

11 Aug 2015 | Author: | No comments yet »

Bank of Russia Gets Putin’s Praise as Ruble Rebounds With Crude.

Russian President Vladimir Putin commended the central bank for its efforts to keep the ruble stable after policy makers called for calm as the currency bounced back from a six-month low. “The central bank is doing a lot to strengthen the national currency or in any case to ensure its stability and the stability of the financial system as a whole,” Putin said at a meeting with Governor Elvira Nabiullina. “I see how persistent you are in going down that path.” The Bank of Russia said on Monday that corporate debt payments in 2015 won’t overwhelm the foreign-exchange market with “excessive demand” after redemptions last year helped spark the worst currency crisis since 1998.The preliminary estimate released on August 10 by Russia’s official Rosstat agency follows a less dramatic decline of 2.2 percent in the first quarter of 2015. It defended the operations as compatible with its free float and has pledged to avoid interventions unless the ruble’s swings threatened financial stability.

The nation’s current-account surplus, which may also help finance debt repayments, is estimated at about $20 billion with oil at $40 a barrel, it said in the statement. It made currency available through its operations starting in October, introducing one-year facilities the following month to curb a deficit in dollar liquidity. The regulator cited its survey of the 30 biggest Russian companies that account for as much as 60 percent of total repayments by non-financial organizations through the rest of 2015.

The central bank’s comments “will partially support the ruble, but will appeal mainly to the most emotional, speculatively biased investors,” said Denis Davydov, an analyst at Nordea Bank AB in Moscow. “The most vulnerable issue for the market is the price of oil.”

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