RUSSIA-MARKETS/ROUBLE Russian rouble falls to new all-time lows, hits 54 against euro
Record ID:
708188
RUSSIA-MARKETS/ROUBLE Russian rouble falls to new all-time lows, hits 54 against euro
- Title: RUSSIA-MARKETS/ROUBLE Russian rouble falls to new all-time lows, hits 54 against euro
- Date: 28th October 2014
- Summary: MOSCOW, RUSSIA (OCTOBER 28, 2014) (REUTERS) VARIOUS OF RUSSIAN CENTRAL BANK SIGN READING (Russian) 'CENTRAL BANK OF RUSSIAN FEDERATION' VARIOUS OF CURRENCY RATES ON DISPLAYS (SOUNDBITE) (Russian) BANK OF AMERICA MERRILL LYNCH CHIEF ECONOMIST, VLADIMIR OSAKOVSKY, SAYING: "First of all, of course we have the falling oil prices, that is our core export product. So it creates certain pressure on the rouble itself. And apart from this there is of course certain political background, there are limitations for the capital flow from foreign countries, caused by political factors, particularly the sanctions. For this reason Russia, Russian companies and corporations have very limited possibilities for financing the external debt. Due to this the companies, the banks and the people are forces to accumulate foreign currency assets in order to pay their external debt." (SOUNDBITE) (Russian) BANK OF AMERICA MERRILL LYNCH CHIEF ECONOMIST, VLADIMIR OSAKOVSKY, SAYING: "The falling of the national currency is absolutely positive for the Russian budget, because actually half of our revenues are foreign currency revenues. So the lower the rouble's rate is, the bigger is its (revenue's) rouble component. And for the economy as a whole, it creates at least some import substitution, and maintains corporate incomes on the acceptable level." HANDS ON TABLE PEOPLE IN STREET (SOUNDBITE) (Russian) MOSCOW RESIDENT, ZINAIDA,SAYING: "What I notice is the prices, they have grown significantly, of course. That is very bad for us." CURRENCY RATE DISPLAY (SOUNDBITE) (Russian) MOSCOW RESIDENT, TATIANA,SAYING: "Everything can happen here. It does not depend here on whether the rouble grows or falls. Here if the owner wants to raise (the prices), he will do so. And then our guys (officials) start proving why the oil prices keep falling and the petrol prices keep rising. And why? Who will tell us?" CURRENCY RATE DISPLAY IN STREET (SOUNDBITE) (Russian) MOSCOW RESIDENT, ANASTASIA, SAYING: "It seems to me, that no matter if the dollar rises or not, the prices always are rising. When did they not rise? I think it is already such an ordinary situation. If prices would not rise, that would be strange and unusual." CURRENCY RATE DISPLAY PEOPLE IN STREET
- Embargoed: 12th November 2014 12:00
- Keywords:
- Topics: General
- Reuters ID: LVADO9LQLDW3EMWSOO08CT5MQV5S
- Story Text: The rouble weakened against both the dollar and the euro in early trade on Tuesday (October 28), extending losses from the previous session and adding further pressure on the central bank ahead of its rate meeting later in the week.
At 0740 GMT, the rouble was 0.41 percent weaker against the dollar at 42.45 and lost 0.6 percent to trade at 53.99 versus the euro.
The rouble has fallen over 20 percent this year on falling oil prices, risk aversion towards Russia because of its role in the Ukraine crisis and demand for foreign currency from Russian firms shut out of international capital markets.
The central bank said early on Tuesday it had spent a further $2.4 billion to defend the rouble on Oct. 24, taking the total amount it has spent this month to over $18 billion.
Bank of America Merrill Lynch Chief economist Vladimir Osakovsky told Reuters, that Russian currency rate is sensitive to the economic sanctions.
"First of all, of course we have the falling oil prices, that is our core export product. So it creates certain pressure on the rouble itself. And apart from this there is of course certain political background, there are limitations for the capital flow from foreign countries, caused by political factors, particularly the sanctions. For this reason Russia, Russian companies and corporations have very limited possibilities for financing the external debt. Due to this the companies, the banks and the people are forces to accumulate foreign currency assets in order to pay their external debt," he said.
He also noted that in some sense the rouble's fall was beneficial for Russia's budget.
"The falling of the national currency is absolutely positive for the Russian budget, because actually half of our revenues are foreign currency revenues. So the lower the rouble's rate is, the bigger is its (revenue's) rouble component. And for the economy as a whole, it creates at least some import substitution, and maintains corporate incomes on the acceptable level," said Osakovsky.
Moscow residents said they have noticed the general increase in prices, but most do not connect it with the fall of the national currency.
"What I notice is the prices, they have grown significantly, of course. That is very bad for us," said Zinaida, who lives in Moscow.
"Everything can happen here. It does not depend here on whether the rouble grows or falls. Here if the owner wants to raise (the prices), he will do so. And then our guys (officials) start proving why the oil prices keep falling and the petrol prices keep rising. And why? Who will tell us?" Tatiana, another Moscow resident said.
"It seems to me, that no matter if the dollar rises or not, the prices always are rising. When did they not rise? I think it is already such an ordinary situation. If prices would not rise, that would be strange and unusual," said Anastasia, who also lives in Moscow.
The central bank's board meets on Oct. 31 to discuss monetary policy, and there is growing speculation it may soon raise rates to support the rouble.
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