Category: Russia

(Bloomberg) — Don’t get too excited about the Russian ruble’s best ever rally. That’s the advice of banks from Credit Suisse Group AG to Sweden’s SEB AB, which warn that the currency’s 12 percent gain versus the dollar this month is vulnerable because it depends on a Ukraine cease-fire and Brent oil staying at about $60 a barrel. Options traders remain more bearish on the ruble than on any of its 31 major peers, and strategists are cutting their forecasts to anticipate an 8 percent decline by mid-year. “It’s not a turning point,” said Per Hammarlund, the chief emerging-markets strategist in Stockholm at SEB, which sees the ruble tumbling 10 percent by the end of next month. “The risk of an oil-price reversal is significant. A resurgence of fighting in Ukraine would also weaken the ruble.” A relapse in the exchange rate would heap further pressure onto President Vladimir […]

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(Bloomberg) — Russian retail sales fell last month for the first time in more than five years as real wages plunged the most since 1999, underscoring the damage inflicted on the economy by a tailspin in oil prices and the ruble’s collapse. Sales declined 4.4 percent from a year earlier after expanding 5.3 percent in December, the Federal Statistics Service in Moscow said Wednesday in a statement. The median estimate of 14 economists surveyed by Bloomberg was for a 1.9 percent decline. Wages adjusted for inflation shrank 8 percent. The drop in consumption, which accounts for about half the economy, is the latest blow for President Vladimir Putin as Russia lurches into recession following the oil rout and U.S. and European sanctions over Ukraine. The fastest inflation rate in almost seven years and the ruble’s 46 percent slump in 2014 are eating into workers’ paychecks, putting Russia on track […]

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(Bloomberg) — The ruble ended a four-day rally as signs that oil’s rebound won’t last cast a shadow over the biggest currency rally globally this month. The Russian currency weakened as much as 1.2 percent against the dollar as Brent crude, the grade used to price Russia’s main export blend, traded below $60 for a second day. The country’s stocks and bonds also retreated. As options traders bet oil’s rebound will reverse because of rising U.S. production, the prospects for Russian assets to hold on to gains are declining as the slide in oil and sanctions over Ukraine threaten to worsen a looming recession. Brent has tumbled 6.4 percent in the past two days, trimming its advance from last month’s six-year low to 30 percent. “Russian assets are closely following the oil price and the outlook for oil is negative,” Andrey Vashevnik, the chief investment officer at R&B Investment […]

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Russian energy company Gazprom says it can weather the storm of low oil prices. (UPI/Shutterstock/Igor Golovniov) MOSCOW, Feb. 19 (UPI) — Russian energy company Gazprom will be able to continue as normal even if oil prices drop to $30 per barrel, the company’s finance director said Thursday. The Russian economy is entering a period of prolonged weakness because of the dual strains of Western sanctions imposed in response to crises in Ukraine and a weak crude oil market. Though recovering, crude oil prices are about 40 percent less than they were in June 2014. With few signs of a cease-fire holding in eastern Ukraine, some Western powers have enacted additional sanctions on Russia . Gazprom Finance Director Andrei Kruglov told state-run television the company planned for oil prices in the range of $30-40 per barrel when drafting its 2015 budget . "The company will be ready to implement all […]

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European Union authorities will move ahead soon with a long-running antimonopoly case against Russian energy giant Gazprom, European Union competition Commissioner Margrethe Vestager said in an interview. Photo: EPA BRUSSELS—A sculpture of a raised middle finger greets visitors to the elegant offices of Margrethe Vestager, the most powerful woman in Brussels. It is a reminder, from a disgruntled lobby group in her native Denmark, that tough decisions come with the territory. One hundred days into her new job, Europe’s antitrust chief is preparing a series of politically explosive decisions involving some of the world’s biggest companies, including Google Inc., Apple Inc. and Amazon.com Inc. Perhaps her most incendiary case is a 2½-year-old probe into Russian energy company Gazprom OAO . In an interview, Ms. Vestager said she will move against the state-owned company shortly despite the Ukraine crisis, opening up the possibility of multibillion-dollar fines. “I think we can […]

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ENLARGE A currency exchange office in Moscow last month. The ruble has lost almost half its value against the dollar over the past 12 months. Photo: European Pressphoto Agency MOSCOW—Economic data published Wednesday showed Russia’s economy moving further toward recession under the weight of Western sanctions and a sharp decline in the price for oil, its main source of hard currency. Although the rate of inflation is slowing, a sharp decline in retail sales and a drop in real wages indicated that consumers are bearing the brunt of the economic pressure. The government expects gross domestic product to shrink by 3% in 2015, the first drop since 2009; many private economists expect a deeper contraction. The Wednesday data from the Federal Statistics Service RosStat showed a decline in domestic demand, which had been one of the main drivers of the economy for years, but has been hit by a […]

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Russian economy to enter period of prolonged decline, Kremlin report says. File Photo by Denis Larkin/Shutterstock MOSCOW, Feb. 17 (UPI) — Russia’s economy is entering a period of prolonged retraction because of the dual strains of sanctions and weak crude oil markets, the Economy Ministry said. A forecast for 2015 by the Russian Economy Ministry expects export revenues to decline as Russian energy products wane from the world market. "Gross domestic product is expected to contract by 3 percent amid persistently strong geopolitical risks and the presumption that average annual oil prices will equal $50 per barrel," the document, released Monday, said. "Forecasts show that the Russian economy will enter a phase of a prolonged decline in 2015." Russia’s currency, the ruble, is contracting as the economy weakens. The ruble was trading near 63 to the U.S. dollar, close to a historic low. In December, the World Bank said […]

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Valve control wheels are seen on pipework near gas well site at Bovanenkovo gas field, Yamalo-Nenetsky region, Russia, on Tuesday, Oct. 23, 2012. (Bloomberg) — U.S. and European suppliers to the oil industry are still able to seek work in Russia’s Arctic despite sanctions designed to limit their involvement because the rules don’t apply to foreign subsidiaries. Schlumberger Ltd., based in Houston and the world’s largest oil services company, and Baker Hughes Inc. have used units based outside the U.S. to bid for business in Russia’s Arctic, according to a Russian government website. Offshore projects in the Arctic are among those targeted by U.S. and European sanctions against Russia’s oil industry. There’s no allegation either company broke the rules and none of the bids was successful. Nonetheless, the use of subsidiaries to legally skirt sanctions will raise questions about the effectiveness of measures imposed to punish Russia by limiting […]

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