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    » 12/12/2008, 00.00

    RUSSIA

    Russia devalues ruble, squeezed by lower oil prices



    It is the fifth devaluation since of November 11, and experts predict that it will fall even further over the next year. The exchange rate is also feeling the effects of the war in Georgia, and of the global crisis that has led foreigners to remove 200 billion dollars in investments.

    Moscow (AsiaNews/Agencies) - Russia is devaluing the ruble for the fifth time in a month, expanding the exchange rate band against the euro and the U.S. dollar, after months of defending the currency led to a drop in its reserves.

    Moscow is in difficulty because of the sharp fall in oil prices: crude from the Urals, the main export, has fallen to about 40 dollars a barrel, losing 71% since the record in July. Moreover, the ruble has suffered the negative effects of the war in Georgia. The world financial crisis has also caused the withdrawal of foreign investments, at about 200 billion dollars. In order to defend the ruble's exchange rate, the country has sold about 27% of its reserves since August, reducing its foreign currency holdings to 161 billion dollars.

    It now takes about 36.7 rubles to buy one euro, and 27.9 for one dollar.

    Experts maintain that this was a "forced choice," and that Moscow will have to let its currency decline further. In November, it lost 4.8% of its value against a basket of currencies.

    Experts from Goldman Sachs estimate that the drop in oil prices will force the ruble to lose another 25% in 2009, and Troika Dialog, Russia's oldest investment bank, is calling for a devaluation of 20% over the next few weeks, possibly over the period of the Christmas vacation, when there is less financial activity. The Italian bank Unicredit expects a drop of 15% by the end of next year.

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    See also

    24/04/2009 CHINA
    China increases its gold reserves
    Experts maintain that Beijing wants to increase its gold reserves to 5,000 tons, to protect itself from the global crisis and the possible devaluation of the dollar. It now has about 31 billion dollars worth of gold, but foreign currency reserves of 1.95 trillion.

    03/01/2009 ASIA - CHINA - U.S.
    Chinese yuan set to replace dollar
    Beijing has launched the experiment of using the yuan as a reserve currency in relations with 8 countries. Chinese exporters are asking to charge in yuan instead of dollars, because the U.S. currency is losing value. But China needs to revise its model of development, too much inspired by eighteenth century mercantilism.

    04/12/2008 RUSSIA
    Russian leaders exploit crisis to increase their power
    Heavy subsidies, especially for state-run companies already controlled by the leaders, and greater presence of the government, which is "buying" participation or key posts in business. But if the crisis continues, Moscow could have problems.

    27/10/2008 CHINA
    China is in good shape, but must not underestimate the global crisis
    The director of China's central bank, Zhou Xiaochuan, illustrates the situation in the country and the possible strategies for addressing it. Beijing is demonstrating caution in anticipation of seeing how significantly the worldwide crisis might strike it, but is confident that it will be able to continue its rapid growth.

    31/10/2008 CHINA - CENTRAL ASIA - RUSSIA
    China wants to be stabilizing force for central Asia
    Prime Minister Wen, in Astana for the summit of the Shanghai Cooperation Organization, proposes more cooperation and the creation of an extensive infrastructure network, including for energy. On the strength of its currency reserves, it wants to expand its connections with neighboring states, and take advantage of their resources.



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