Russia

Russia’s economy will shrink by close to 5 per cent this year, the European Bank for Reconstruction and Development forecast, while average growth for eastern Europe and the former Soviet Union will fall into negative territory for the first time since 2009, the Financial Times reported. The development bank for the former Communist bloc said plunging oil prices and western sanctions would lead to a contraction in the Russia’s economy of 4.8 per cent this year, compared with a forecast drop of 0.2 per cent in September.

The Russian central bank’s net currency interventions in 2014 amounted to $76.13 billion and €5.41 billion, Interfax news agency reported on Monday, citing central bank data, the Irish Times reported. Interventions in the month of December amounted to $11.9 billion. The bank intervened heavily last year as the rouble slumped because of international tensions over the Ukraine crisis and plummeting prices for oil, Russia’s main export. The Russian rouble opened more than 2 per cent lower against the dollar on Monday, dragged down by flagging oil prices.

Russia has moved to support a number of large companies and banks as it tries to prop up a struggling economy and a banking sector battered by the rouble’s jitters, the Financial Times reported. On Wednesday, the government said it would support Yamal LNG, the Arctic gas project of Novatek, with Rbs150bn. Separately Gazprombank, the country’s third-largest lender, said the government had bought Rbs39.95bn in preferred shares, using money from a subordinated deposit the bank had returned to the National Wealth Fund.

Russia’s economy contracted for the first time in more than five years in November, taking a step toward a full-scale recession next year, data from the economy ministry showed Monday, The Wall Street Journal reported. After an optimistic start to the year, when Russia hosted the Winter Olympic Games and enjoyed high oil prices, the world’s largest country by area later stumbled over Western sanctions, massive capital outflows and a sudden drop in oil prices. Now the economy is widely seen contracting next year for the first time since the global financial crisis.

Foreign banks have fled Russia in dramatic fashion in 2014, cutting back their exposure to the country well ahead of the latest escalation of the rouble crisis, the Financial Times reported. Overall syndicated loan volumes this year collapsed to just 14 per cent of the 2013 total, as western lenders retrenched from a market that looked increasingly risky as the year progressed. Foreign banks are expected to continue retreating next year, putting further pressure on Russia’s already fragile economy.

Seeking to calm growing fears of an economic meltdown, the Russian government on Wednesday introduced a package of measures to reduce pressures on banks and urged the public to stay calm, the International New York Times reported. It seemed to work, at least temporarily. By Wednesday evening, amid indications of a government intervention in the currency markets, the ruble had recovered more than 11 percent of the previous day’s losses. Prime Minister Dmitri A.

The battered ruble plunged to a record low against the dollar again Tuesday, as investors grew convinced that the Russian central bank’s surprise move overnight to jack up interest rates to 17% wouldn’t be enough to alleviate the pressure on the currency from falling oil prices and western sanctions, The Wall Street Journal reported. By early afternoon in Moscow, the ruble dropped sharply, reaching 80 to the dollar, a record low and a 15% decline from opening levels when it rallied briefly. At 4:30 p.m. local time, the dollar was trading around 73 rubles.

Russia has a new enemy: the currency markets. Russia’s government is in the middle of an all-out fight to preserve the value of the ruble in the face of plummeting oil prices and Western sanctions over the Ukraine crisis, the International New York Times reported. In the boldest move yet to stanch the bleeding, the Central Bank of Russia announced a stunning interest rate increase in the middle of the night. Its main deposit rate is now 17 percent, up from 10.5 percent when Russian banks closed for business on Monday.

The ruble’s plunge against the euro and the dollar is upending the lives of many in Russia’s middle class, which in recent years has gotten used to vacations abroad and Western products from gadgets to food, The Wall Street Journal reported. Booming oil prices helped Russia’s middle class grow to 60% of the population in 2010 from 30% a decade earlier, according to the World Bank.

The Perm-based Avialeasing investment company has lodged a bankruptcy petition against Russia’s leading regional carrier, UTair, which has failed to pay 3.5 million rubles ($67,000) for leasing Tu-154-M planes, the press service of the arbitration court said on Monday, the ITAR-TASS news agency reported. The airline’s current debt exceeds 3.5 million rubles, the court in Russia’s Khanty-Mansi Autonomous Region said citing Avialeasing. “That’s why Avialeasing has asked the court to declare UTair bankrupt.” The court is expected to announce the decision within five days, the press service said.