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No financial meltdown expected in Russia following U.S. market drop |
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April 19, 2000
MOSCOW, APR 18 (AP) - Wall Street's gyrations are unlikely to cause a financial meltdown in Russia, officials said Tuesday, as Russia's markets appeared to stabilize after an initial tumble.
Russia's benchmark index sank 7.8 percent on Monday, following last week's declines on Wall Street, but no further slide occurred Tuesday.
"I don't see any danger of this turning into a really grave crisis," Russian Deputy Prime Minister Viktor Khristenko said, according to the ITAR-Tass news agency. Khristenko was speaking in Washington, after talks with officials from the International Monetary Fund and World Bank - Russia's two main creditors.
Russia's markets were among the world's most attractive before the country succumbed to the world crisis in developing markets in August 1998. The government defaulted on $ 40 billion in treasury debt, the stock market tumbled 88 percent, and the ruble dropped from 6 to the dollar to about 26 to the dollar by the end of the year.
Analysts said a repeat meltdown following last week's plunge on Wall Street was unlikely - partly because of the 1998 crisis. Many foreign investors fled after the collapse, leaving Russia less linked to world financial markets and susceptible to global upheaval.
Alexander Shokhin, the head of the parliamentary committee on lending organizations and financial markets, said that the rebound of big-name technology stocks on Wall Street on Monday also indicated that the shake-up will not have a serious impact on Russia, ITAR-Tass reported.
Still, the Russian ruble continued its slide Tuesday. It dropped from 28.6 to the dollar to 28.78 to the dollar, after a similar drop Monday.
Central Bank chief Viktor Gerashchenko dismissed the slide as insignificant. "I believe everything will be stable," he was quoted as saying by ITAR-Tass.
Meanwhile, the head of Russia's parliamentary committee for economic policy, Sergei Glazyev, even suggested that the plunge on Wall Street could benefit Russia. Investors could turn to Russia's most solid companies in place of Western ones, he said, according to ITAR-Tass.
Khristenko, meanwhile, said his talks with the IMF and World Bank were "successful enough" and that the "spirit of good partnership" has returned.
The IMF froze a $ 4.5 billion loan to Russia in September. The World Bank also has said it will likely delay the next installment of its $ 1.5 billion loan to Russia because the government has failed to meet loan conditions.
In a separate development, Russia's state statistics agency reported that skyrocketing exports nearly doubled the country's trade surplus to $ 9.5 billion in the first two months of this year from $ 5.1 billion during the same period in 1999.
Exports rose 49 percent to $ 13.8 billion in January-February, while imports posted minor growth of 3.7 percent, to $ 4.3 billion.
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