The ruble and stocks rallied after the Bank of Russia announced the measures. They came a day after the central bank’s 1 a.m. interest-rate increase and a freefall of as much as 19 percent in the currency, prompting speculation of a potential meltdown in emerging markets.
The package of measures allows banks to use the third-quarter exchange rate in valuing risk-weighted assets and imposes a moratorium on mark-to-market accounting. Russian companies face about $20.3 billion in non-ruble loan and debt repayments before the end of March, according to data compiled by Bloomberg. The ruble has dived 35 percent this quarter.
“The most important measure is this use of third-quarter valuation for risk-weighted assets,” Natalia Berezina, banking analyst at UralSib Capital, said by phone. “This is a big boost as some banks would fail to meet central bank regulatory capital ratios at their current levels.”
The ruble strengthened 9.4 percent against the dollar, paring its decline for the year to 47 percent. The ruble-denominated Micex stock index fell 2.1 percent in Moscow, while the dollar-based RTS surged 14.2 percent.The gains may enable President Vladimir Putin to continue to strike a confrontational stance as he holds his annual news conference tomorrow. The event comes at one of the most difficult moments of his 15-year rule. Oil prices are collapsing, finger-pointing among officials is breaking into the open, new sanctions over Ukraine are possible and the country is careening toward recession.
‘Moment of Truth’
“This is a moment of truth” for Putin, said Masha Lipman, an independent political analyst in Moscow. “It’s no longer possible to go on in the same fashion. The economy is tumbling. The time has come for a definitive choice, doing nothing won’t solve the problem.”
The interest rate increase to 17 percent from 10.5 percent will crush lending to households and businesses and deepen Russia’s looming recession, according to Neil Shearing, chief emerging-markets economist at London-based Capital Economics Ltd.
Many Russians are shielded from the scope of the crisis. State-run media outlets steered any criticism away from Putin and portrayed the government as ready to take firm action.
