Russia may recover faster than expected
Saturday, 28 March 2009
Vivianne Rodrigues
Russia's economy may rebound faster than anticipated as banks and companies adjust their balance sheets and as the central bank's ruble policy takes effect, Troika Dialog said on Thursday.
"Banks and companies are slowly readjusting their balance sheets, the central bank is being very aggressive and speculation with the ruble has slowed, which all will contribute to a rebound still this year," Evgeny Gavrilenkov, chief economist at Troika, told Reuters in New York.
Troika Dialog is one of Russia's largest brokerages and asset management firms, with about $5.5 billion in assets.
Gavrilenkov said the Russian central bank's policy of intervention in the currency markets and cash injections through repo facilities has helped keep the ruble stable.
With a steadier currency and the pace of capital outflows slowing, the next step is for companies and banks to recoup some of the losses stemming from a spate of defaults and bad loans, he added.
"There's more equilibrium in money markets and real rates are coming down," Gavrilenkov said.
The ruble traded at 38.84 versus a euro-dollar basket on Thursday, more than 5 percent off the weaker end of the 26- to 41-ruble trading range the central bank pledged to defend when it sought to draw a line under devaluation two months ago.
Russian banks have been hit hard by the credit crunch, the ruble's depreciation and a collapse in domestic markets.
Still, officials said on Wednesday that banks could count on further state aid if bad loans rise. They also said that despite problems in the sector, Russia's top two lenders, VTB (VTBR.MM) and Sberbank SBERO3.MM, should still pay dividends.
"Russia's central bank is finally acting as a lender of last resort," said Gavrilenkov. "In the past, when money was pouring in, there was no need for effective monetary and fiscal policies. But things have changed."
Gavrilenkov said Russia's large pool of foreign reserves and "manageable" foreign debt levels made sovereign and quasi-sovereign bonds still attractive for investors seeking exposure to Russian markets.
"The country has enough reserves and the situation with foreign debt payments is such that those bonds may be interesting," he said. "We could see a full recovery in local money markets and in many distorted balance sheets in the second half of the year." --Reuters
Russia's economy may rebound faster than anticipated as banks and companies adjust their balance sheets and as the central bank's ruble policy takes effect, Troika Dialog said on Thursday.
"Banks and companies are slowly readjusting their balance sheets, the central bank is being very aggressive and speculation with the ruble has slowed, which all will contribute to a rebound still this year," Evgeny Gavrilenkov, chief economist at Troika, told Reuters in New York.
Troika Dialog is one of Russia's largest brokerages and asset management firms, with about $5.5 billion in assets.
Gavrilenkov said the Russian central bank's policy of intervention in the currency markets and cash injections through repo facilities has helped keep the ruble stable.
With a steadier currency and the pace of capital outflows slowing, the next step is for companies and banks to recoup some of the losses stemming from a spate of defaults and bad loans, he added.
"There's more equilibrium in money markets and real rates are coming down," Gavrilenkov said.
The ruble traded at 38.84 versus a euro-dollar basket on Thursday
Russian banks have been hit hard by the credit crunch, the ruble's depreciation and a collapse in domestic markets.
Still, officials said on Wednesday that banks could count on further state aid if bad loans rise. They also said that despite problems in the sector, Russia's top two lenders, VTB (VTBR.MM) and Sberbank SBERO3.MM, should still pay dividends.
"Russia's central bank is finally acting as a lender of last resort," said Gavrilenkov. "In the past, when money was pouring in, there was no need for effective monetary and fiscal policies. But things have changed."
Gavrilenkov said Russia's large pool of foreign reserves and "manageable" foreign debt levels made sovereign and quasi-sovereign bonds still attractive for investors seeking exposure to Russian markets.
"The country has enough reserves and the situation with foreign debt payments is such that those bonds may be interesting," he said. "We could see a full recovery in local money markets and in many distorted balance sheets in the second half of the year." --Reuters