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Rouble halts fall but remains volatile as Russia awaits Vladimir Putin speech Rouble halts fall but remains volatile as Russia awaits Vladimir Putin speech
(about 3 hours later)
The rouble stopped its downward spiral on Wednesday but remained volatile during the day, as Russia waited for Vladimir Putin to to pronounce on the country’s currency crisis. The rouble stopped its downward spiral on Wednesday but remained volatile during the day, as Russia waited for Vladimir Putin to pronounce on the country’s currency crisis.
The Russian president said earlier in the month that a falling rouble was good for the country as it would stimulate domestic production, but he has not spoken on the matter publicly since the currency’s collapse at the beginning of this week.The Russian president said earlier in the month that a falling rouble was good for the country as it would stimulate domestic production, but he has not spoken on the matter publicly since the currency’s collapse at the beginning of this week.
Putin will give his annual press conference on Thursday, a ritualised marathon in which he speaks for hours on all areas of policy.Putin will give his annual press conference on Thursday, a ritualised marathon in which he speaks for hours on all areas of policy.
The rouble has lost around half its value against the dollar since the start of the year and the economic stability that has been the cornerstone of Putin’s promises to the Russian people appears seriously under threat.The rouble has lost around half its value against the dollar since the start of the year and the economic stability that has been the cornerstone of Putin’s promises to the Russian people appears seriously under threat.
Analysts say falling oil prices have combined with structural problems and the effect of western sanctions to create a “perfect storm” that has battered the rouble. A hike in interest rates from 10.5% to 17% late on Monday failed to halt the slide, and the central bank has been burning through its foreign currency reserves in at attempt to stem the fall.Analysts say falling oil prices have combined with structural problems and the effect of western sanctions to create a “perfect storm” that has battered the rouble. A hike in interest rates from 10.5% to 17% late on Monday failed to halt the slide, and the central bank has been burning through its foreign currency reserves in at attempt to stem the fall.
On Wednesday, the rouble rose to 63 against the dollar, fell back down to 72 and then rose again to 65 early in the afternoon. It hit a low of 80 to the dollar on Tuesday, down from 34 at the start of the year. On Wednesday, the rouble rose to 63 against the dollar, fell back down to 72 and then rose again to 60. It hit a low of 80 to the dollar on Tuesday, down from 34 at the start of the year.
Much of the rally on Wednesday appeared to be the result of government intervention, making it unclear whether the rouble would stabilise properly or had just reached a temporary plateau.Much of the rally on Wednesday appeared to be the result of government intervention, making it unclear whether the rouble would stabilise properly or had just reached a temporary plateau.
The central bank has spent more than $80bn in foreign reserves this year propping up the currency.The central bank has spent more than $80bn in foreign reserves this year propping up the currency.
Some analysts suggested that capital controls would have to be introduced, but the Russian prime minister, Dmitry Medvedev, told a meeting of the cabinet convened to discuss the situation that normal market mechanisms should be used instead.Some analysts suggested that capital controls would have to be introduced, but the Russian prime minister, Dmitry Medvedev, told a meeting of the cabinet convened to discuss the situation that normal market mechanisms should be used instead.
“Everyone recognises that the rouble is undervalued. It has become detached from fundamentals and does not reflect the state of the economy,” he said.“Everyone recognises that the rouble is undervalued. It has become detached from fundamentals and does not reflect the state of the economy,” he said.
As the currency plummeted on Monday and Tuesday, however, the sanguine feeling that the economy was in for a difficult period but that there would be no major collapse began to disintegrate.As the currency plummeted on Monday and Tuesday, however, the sanguine feeling that the economy was in for a difficult period but that there would be no major collapse began to disintegrate.
“There is a greater degree of panic and loss of control than we thought we were facing,” said Sam Greene, the director of King’s Russia Institute in London.“There is a greater degree of panic and loss of control than we thought we were facing,” said Sam Greene, the director of King’s Russia Institute in London.
“I don’t think there’s any reason to believe that we’re done yet. I don’t see anyone who has offered a good way out of this. We are looking at significant recession next year, significant drop-offs in earnings. We are really in uncharted territory.”“I don’t think there’s any reason to believe that we’re done yet. I don’t see anyone who has offered a good way out of this. We are looking at significant recession next year, significant drop-offs in earnings. We are really in uncharted territory.”
Shops in Moscow are putting up prices rapidly to keep up with the plummeting rouble, and Apple closed its online shop in Russia.Shops in Moscow are putting up prices rapidly to keep up with the plummeting rouble, and Apple closed its online shop in Russia.
There has been a flurry of retail activity as Russians scramble to buy goods imported before the currency crash and still priced at the old rate. Others cancelled foreign holidays, realising how little their roubles were now worth abroad, while those with euro or dollar mortgages and loans are particularly exposed.There has been a flurry of retail activity as Russians scramble to buy goods imported before the currency crash and still priced at the old rate. Others cancelled foreign holidays, realising how little their roubles were now worth abroad, while those with euro or dollar mortgages and loans are particularly exposed.
“In the last couple of days several people have come up to me and asked if I could find them jobs abroad,” said one western banker in Moscow. “And I’m talking about people who even a month ago were very patriotic and supportive of everything going on here.”“In the last couple of days several people have come up to me and asked if I could find them jobs abroad,” said one western banker in Moscow. “And I’m talking about people who even a month ago were very patriotic and supportive of everything going on here.”
Kremlin watchers will be looking closely to see if Putin takes adopts a more conciliatory tone or comes out fighting on Thursday. In his state of the nation address earlier in the month, he was combative, blaming the west for trying to destroy Russia and justifying the annexation of Crimea as the return of “sacred Russian land”.Kremlin watchers will be looking closely to see if Putin takes adopts a more conciliatory tone or comes out fighting on Thursday. In his state of the nation address earlier in the month, he was combative, blaming the west for trying to destroy Russia and justifying the annexation of Crimea as the return of “sacred Russian land”.
Putin’s spokesman, Dmitry Peskov, said the president would not comment on the rouble before his press conference. Earlier this month, he blamed the fall on speculators, whom he said would be identified and punished.Putin’s spokesman, Dmitry Peskov, said the president would not comment on the rouble before his press conference. Earlier this month, he blamed the fall on speculators, whom he said would be identified and punished.
The tough rhetoric, however, has not helped stem the fall, and there has been an unusually public spat between various branches of the government over whose decisions are to blame.The tough rhetoric, however, has not helped stem the fall, and there has been an unusually public spat between various branches of the government over whose decisions are to blame.
Putin’s annual press conferences involve more than 1,000 journalists and often lasts more than four hours. They feature many softball and planted questions and do not offer the opportunity for follow-up, allowing him to wax lyrical about everything from domestic issues to foreign policy and his life philosophy.Putin’s annual press conferences involve more than 1,000 journalists and often lasts more than four hours. They feature many softball and planted questions and do not offer the opportunity for follow-up, allowing him to wax lyrical about everything from domestic issues to foreign policy and his life philosophy.
This year, however, the tone is likely to be different, as Putin seeks to prove that he retains control of the economic situation.This year, however, the tone is likely to be different, as Putin seeks to prove that he retains control of the economic situation.
“The atmosphere in society has changed, intangibly but irrevocably,” wrote the columnist Mikhail Rostovsky in the newspaper Moskovsky Komsomolets on Wednesday.“The atmosphere in society has changed, intangibly but irrevocably,” wrote the columnist Mikhail Rostovsky in the newspaper Moskovsky Komsomolets on Wednesday.
“The sense of stability has again left our lives, as has the sense that Putin is a kind of magician who controls everything: Crimea, tigers, the rouble. Psychologically, Russia has made a small step back towards the 1990s.”“The sense of stability has again left our lives, as has the sense that Putin is a kind of magician who controls everything: Crimea, tigers, the rouble. Psychologically, Russia has made a small step back towards the 1990s.”