RUSSIA'S FINANCIAL SITUATION WORSENING.Byline: Maura Reynolds Associated Press Associated Press: see news agency. Associated Press (AP) Cooperative news agency, the oldest and largest in the U.S. and long the largest in the world. The Russian government failed to restore confidence in its collapsing banking sector Wednesday, with the ruble sinking ever lower and the Central Bank canceling dollar sales after they had been agreed upon Adj. 1. agreed upon - constituted or contracted by stipulation or agreement; "stipulatory obligations" stipulatory noncontroversial, uncontroversial - not likely to arouse controversy . There were signs that the country's financial crisis was escalating. The ruble plunged almost 40 percent against the German mark after the Central Bank voided void·ed adj. Heraldry Having the central area cut out or left vacant, leaving an outline or narrow border: a voided lozenge. trading against the dollar on the Moscow Interbank Currency Exchange Moscow Interbank Currency Exchange (MICEX) Established in 1992, the most liquid and best organized financial exchange in Russia. , and banks reported that the government had failed to make some payments on its longer-term debt. Acting Prime Minister Viktor Chernomyrdin Viktor Stepanovich Chernomyrdin (Russian: Ви́ктор Степа́нович Черномы́рдин rushed to Ukraine to hold an emergency meeting with International Monetary Fund head Michel Camdessus Michel Camdessus (born 1 May 1933) was Managing Director of the International Monetary Fund (IMF) from 16 January 1987 to 14 February 2000. Among the most important events of his tenure was the East Asian financial crisis. . He was expected to plead with the IMF IMF See: International Monetary Fund IMF See International Monetary Fund (IMF). not to delay the next installment of a multibillion-dollar loan that Russia has been using to shore up its Central Bank reserves, eroded by the effort to support the ruble. But while some Russians were angry that they could withdraw bank deposits only in rubles, not dollars, panic had yet to swell in the streets of the capital. The financial crisis has so far had little effect on ordinary Russians, who don't own stocks or bonds or mutual funds. The anxiety some are beginning to feel comes largely from fear of inflation, which many expect to rise in the wake of the government's decision to devalue the ruble. The devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. , announced 10 days ago, has increased demand for dollars both among banks and the public. Banks with inadequate hard currency reserves are expected to collapse; the first, the Imperial Bank, went belly up Wednesday. Like many in Russia, the small commercial bank concentrates on money speculation instead of customer deposits. Traders and investors expressed dismay with a government debt repayment plan announced Tuesday, and their disappointment dragged down the stock market even farther - closing at 76.26 points, down 8 percent from Tuesday in feeble trading. Foreign investors have already begun withdrawing from Russia in droves, and the losses they will sustain under the plan to restructure the country's massive debts - in some cases receiving just 17 cents on the dollar, according to analysts - will discourage many from returning any time soon. RUSSIAN RUBLE Russia's financial crisis escalated on Wednesday as the ruble sank even lower and the Central Bank canceled dolar sales. Russian rubles to U.S. dollar Jan. 2: 5.95 Aug. 26: 8.26 Source: Bloomberg L.P. CAPTION(S): Chart CHART: RUSSIAN RUBLE (see text) Associated Press |
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