Thursday, August 21, 2008

Money Flowing Out of Russia In Wake of War

Since the conflict began on August 8, yields on domestic rouble bonds have increased by up to 150 basis points.

The tight credit conditions have been exacerbated by foreign capital flight since the war. Data released by Russia’s central bank showed a drop in foreign currency reserves of just over $16.4bn in the week beginning August 8. This was one of the largest absolute weekly drops in 10 years, according to Ivan Tchakarov at Lehman Brothers.

Credit conditions are to be discussed at next month’s “summit of oligarchs”, the Russian Union of Industrialists and Entrepreneurs meeting that former President Vladimir Putin held annually to discuss economic issues.

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