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Military Action Rocks the Banking System and Stock Market, For a While
The continuing conflict between Russia and Georgia led to a 4-percent plunge in the Russian stock market at the beginning of the day yesterday and a drop in the ruble’s exchange rate of 2.59 percent against the dollar (24.55 rubles/$) and 1.71 percent against the euro (36.71 rubles/ˆ). The situation has already led to a liquidity shortage in the Russian banking system. Interbank credit rates jumped to 7-9 percent, from 5 percent, and the Central Bank provided the banks with 241.6 billion rubles in credit on Monday, compared to 127.5 billion on Friday in two one-day repo auctions. One observer called the currency situation a “mini-crisis.”
Experts say the main cause of the drop in the ruble was the massive selloff of Russian securities by nonresidents, who converted the rubles from the sales into dollars. Currency investors also influenced the rate. “There were many investors who were oriented toward the strengthening of the rubles, and now those perspectives are clouded,” an analyst commented. Between the beginning of the year and Friday, the ruble had gained 3.6 percent against the dollar.
At around 1:00, news wires began carrying a statement by Russian President Dmitry Medvedev that Russia had completed a “significant part of the operation to enforce peace in Georgian and South Ossetia” and Tskhinvali was under the control of peacekeepers. Then there were reports that Georgian President Mikheil Saakashvili had signed a ceasefire plan.
The indexes began to rise. On the MICEX, trading was stopped in some stocks because of significant increases in their quotations. Trading in Sberbank common and preferred stock, OGK-5, YuTK and TGK-1 shares was stopped for an hour. At the end of the day, the MICEX index was up 3.87 percent to 1412.5 points and RTS had gained 1.18 percent to the level of 1742.96 points. The differences in the performance of the indexes is due to the fact that the RTS is denominated in dollars, while the MICEX is denominated in rubles.
www.kommersant.com
All the Article in Russian as of Aug. 12, 2008
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