RUSSIAN ECONOMIC AND FINANCIAL DEVELOPMENTS
FOR WEEK ENDING JANUARY 21, 2000
26 JAN 00
SOURCE: U.S. EMBASSY MOSCOW
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FINANCIAL MARKET INDICATORS
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1. FINANCIAL MARKET TRENDS
THE STOCK MARKET COOLED OFF A BIT THIS WEEK AS MARKET
PLAYERS DECIDED TO TAKE SOME PROFITS AND POLITICAL
INFIGHTING IN THE NEW DUMA ADDED NEGATIVE SENTIMENT.
THE RTS INDEX LOST ONLY 0.28 PERCENT FOR THE WEEK IN
REAL TERMS, FOLLOWING A SMALL RALLY ON FRIDAY.
INTERNATIONAL RESERVES WENT UP BY USD300 MILLION TO
USD12.6 BILLION. BASE MONEY SUPPLY WAS DOWN BY 2.78
PERCENT THIS WEEK AND TOTALED R300.6 BILLION.
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2. ECONOMIC AND FINANCIAL MARKET DEVELOPMENTS
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-- RUSSIAN INDUSTRIAL PRODUCTION GREW BY 8.1 PERCENT
IN 1999. INDUSTRIAL PRODUCTION IN DECEMBER WAS UP BY
11.1 PERCENT (Y-O-Y).
-- ACCORDING TO ARKADIY VOLSKY, THE PRESIDENT OF THE
RUSSIAN UNION OF ENTREPRENEURS AND PRODUCERS, THE SIZE
OF RUSSIA'S INVESTMENT MARKET OVER THE NEXT 20 YEARS IS
USD2 TRILLION.
-- TRADE MINISTER KALASHNIKOV SAID CHECHNYA WILL NEED
R300 MILLION IN FINANCING FOR THE SOCIAL SPHERE.
-- THE MOSCOW TAX POLICE CONDUCTED 3234 INSPECTIONS IN
1999. THEY COLLECTED R2.8 BILLION FOR VIOLATIONS AND
INITIATED 250 CRIMINAL CASES AGAINST PRIVATE
INDIVIDUALS. IN 1999, THE MOSCOW TAX POLICE INITIATED
1062 CRIMINAL TAX CASES IN 1999.
-- THE CHAIRMAN OF THE PENSION FUND SAID THE FINANCE
MINISTRY WILL HAVE TO TRANSFER R6.14 BILLION TO THE
PENSION FUND IN THE FIRST QUARTER OF 2000.
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3. BANK ALERT
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-- THE CENTRAL BANK OF RUSSIA (CBR) REPORTED RUSSIA'S
GOLD AND CURRENCY RESERVES AT USD12.6 BILLION ON
JANUARY 14, UP FROM USD12.3 BILLION A WEEK EARLIER.
THIS IS THE HIGHEST LEVEL OF RESERVES SINCE OCTOBER
1998.
-- EFFECTIVE JANUARY 24, THE CBR WILL LOWER THE
REFINANCING RATE FROM 55 P.A TO 45 P.A. CBR CHAIRMAN
GERASCHENKO PROPOSED THIS STEP TWO WEEKS AGO. ACTING
PRESIDENT PUTIN SAID THEN THAT "THIS WOULD BE A VERY
GOOD SIGNAL TO MARKETS AND THE REAL SECTOR, EVIDENCE OF
A REAL STABILIZATION OF RUSSIAN ECONOMY."
-- THE BOARD OF DIRECTORS OF THE AGENCY FOR
RESTRUCTURING CREDIT ORGANIZATIONS (ARCO) HAS DECIDED
TO CREATE A NEW AGRICULTURAL BANK, TO BE REGISTERED AS
A NEW CREDIT ORGANIZATION FOUNDED BY ARCO. ITS
AUTHORIZED CAPITAL WILL BE R375 MILLION. ARCO PLANS
THAT THE GOR WILL HOLD A 51 PERCENT STAKE IN THE BANK
AND THE REST WILL BE PURCHASED BY RUSSIAN REGIONAL
GOVERNMENTS. THE NEW BANK WILL BE HEADED BY YURI
TRUSHIN, WHO PREVIOUSLY WORKED IN AGROPROMBANK AND SBS-
AGRO. THE SUPERVISORY COUNCIL OF THE BANK WILL CONSIST
OF OFFICIALS FROM THE AGRICULTURE, FINANCE AND
ECONOMICS MINISTRIES, AND FOUR OF ARCO'S DEPUTY
DIRECTORS.
-- ARCO SAID IT WILL NOT PARTICIPATE IN THE
REHABILITATION OF TVERUNIVERSALBANK BECAUSE THE BANK'S
FINANCIAL STANDING HAS IMPROVED. THE BANK HAS NEW
INVESTORS, IN PARTICULAR THE NOVOLIPETSK METALLURGY
MILL.
-- THE MOSCOW ARBITRATION COURT DECLARED
MOSBUSINESSBANK BANKRUPT AND PUT THE BANK INTO
RECEIVERSHIP. THE COURT APPOINTED EDUARD REBGUN
RECEIVER ON THE RECOMMENDATION OF THE BANK'S CREDITORS.
THE COURT DISMISSED THE BANK'S MANAGEMENT, TOOK AWAY
ITS AUTHORITY TO DISPOSE OF ASSETS, AND ORDERED IT TO
HAND OVER ALL DOCUMENTATION TO THE RECEIVER WITHIN
THREE WEEKS. THE CBR REVOKED THE BANK'S LICENSE ON
JUNE 29, 1999. AT THE END OF JULY, MOSBUSINESSBANK
(ALONG WITH FIVE OTHER BANKS) LOST THE RIGHT TO SERVICE
MOSCOW CITY GOVERNMENT ACCOUNTS.
-- PROMSTROYBANK-ST.PETERSBURG ANNOUNCED IT PAID USD27
MILLION TO FOREIGN CREDITORS AHEAD OF SCHEDULE. THE
BANK SIGNED A DEBT RESTRUCTURING AGREEMENT WITH
CREDITORS IN THE FALL OF 1999. THE CONDITIONS FOR THE
RESTRUCTURING INCLUDED AN ADVANCE PAYMENT OF USD7.6
MILLION, MONTHLY INTEREST PAYMENTS, THE SETTLEMENT OF
PRINCIPAL DEBT ONCE EACH QUARTER FOR THREE YEARS, AND
EQUAL TREATMENT FOR ALL CREDITORS. ITS FOREIGN
LIABILITIES INCLUDE A 1998 SYNDICATED 6-MONTH LOAN OF
USD45 MILLION, AN EBRD MID-TERM LOAN OF USD17 MILLION,
AND USD30 MILLION IN PROMISSORY NOTES.
-- ASSETS AT MENATEP-ST.PETERSBURG BANK INCREASED 860
PERCENT AS OF JANUARY 1, 2000 (Y-O-Y) TO R15.5 BILLION,
MENATEP-ST.PETERSBURG CEO VITALY SAVELYEV SAID. PRE-
TAX PROFITS AT THE BANK IN 1999 AMOUNTED TO R89.8
MILLION, WITH NET PROFIT OF R29 MILLION. THE BANK'S
CREDIT PORTFOLIO AT THE END OF 1999 EXCEEDED R5
BILLION, COMPARED WITH R650 MILLION AT THE BEGINNING OF
THE YEAR. AS OF THE END OF 1999, 22 OF THE BANK'S 46
BRANCHES WERE PROFITABLE, COMPARED WITH FOUR OUT OF 45
AT THE BEGINNING OF THE YEAR. THE BANK'S CONSOLIDATED
BALANCE SHEET TOTAL INCREASED IN 1999 FROM R100 MILLION
TO R2 BILLION.
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4. PRICES
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ACCORDING TO GOSKOMSTAT, INFLATION FOR THE FIRST 17
DAYS OF JANUARY TOTALED 1.9 PERCENT. DURING THE PERIOD
JAN.11-17, PRICES GREW BY 0.8 PERCENT. AVERAGE DAILY
INFLATION HAS INCREASED SUBSTANTIALLY IN JANUARY, TO
0.109 PERCENT, COMPARED TO 0.040 PERCENT IN DECEMBER
1999, WHEN MONTHLY INFLATION WAS 1.3 PERCENT.
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5. FINANCIAL MARKET TABLES
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A. THE RUBLE EDGES UP
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ALL THROUGH THE WEEK, THE RUBLE WAS SLOWLY BUT STEADILY
FIRMING, AND THE MICEX "TOD" DOLLAR WAS DOWN 0.46 PERCENT
FOR THE WEEK. WEEKLY MICEX TRADE VOLUMES WERE USD937
MILLION AND USD576 MILLION FOR "TOD" AND "TOM",
RESPECTIVELY, SLIGHTLY LOWER THAN LAST WEEK, BUT GREATER
THAN THE AVERAGE OVER THE LAST FEW MONTHS.
TABLE 1A: RUBLE RATES -- MICEX SELT TRADING (NOTE 1)
------------------------------------------------
USD-TOD USD-TOD USD-TOM USD-TOM
DATE AVERAGE VOLUME AVERAGE VOLUME
PRICE (USD MN) PRICE (USD MN)
01/17/00 NO TRADING 28.6844 144.79
01/18/00 28.5710 214.32 28.6036 95.00
01/19/00 28.5169 264.10 28.5659 112.92
01/20/00 28.5141 264.73 28.5557 89.14
01/21/00 28.4421 194.49 28.5150 134.19
TABLE 1B: RUBLE RATES -- CASH RATES AT EXCHANGE POINTS
(RUBLES PER USD) (NOTE 2)
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PRCT CHNG PRCT CHNG
DATE AVERAGE AGAINST AVERAGE AGAINST
BUY WEEK AGO SELL WEEK AGO
-------------------------------------------------
01/17/00 28.50 3.04 28.76 2.31
01/18/00 28.51 0.85 28.79 -1.87
01/19/00 28.48 0.07 28.73 -0.79
01/20/00 28.50 0.39 28.75 -0.28
01/21/00 28.39 0.04 28.69 0.03
TABLE 1C: RUBLE RATES-- CBR OFFICIAL EXCHANGE RATE
-----------------------------------------
PRCT CHNG PRCT CHNG
DATE OFFICIAL AGAINST AGAINST
RATE WEEK AGO 01/01/00
01/17/00 28.5700 4.92 5.81
01/18/00 28.5700 3.03 5.81
01/19/00 28.5700 0.46 5.81
01/20/00 28.5200 -1.14 5.63
01/21/00 28.5100 -0.49 5.59
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B. OFZ MARKET
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PRICES ON THE SECONDARY GKO/OFZ MARKET WERE UP ON
MONDAY. THE SHORTEST OFZ ISSUE HAD A YIELD OF 22
PERCENT P.A. AND THE LONGER TERM OFZ YIELDS FLUCTUATED
IN THE RANGE OF 56-58 PERCENT P.A. PRICES STARTED TO
SLIDE DOWN DURING THE WEEK. ON FRIDAY, HOWEVER, YIELDS
JUMPED UP AGAIN, FUELED BY NEWS OF INCREASING
INTERNATIONAL RESERVES AND THE LOWERING OF THE
REFINANCE RATE BY THE CBR FROM 55 TO 45 PERCENT.
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C. SHORT-TERM INTERBANK SHARPLY DOWN
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SHORT-INTERBANK RUBLE LOAN RATES REMAINED AT RELATIVELY
LOW LEVELS THROUGHOUT THE WEEK. THE ONLY REAL ACTIVITY
WAS IN THE SHORTEST-TERM SECTOR OF THE MARKET. THE
REST OF THE MARKET WAS QUIET DURING THE WEEK, WITH
RATES REMAINING UNCHANGED. BALANCES ON BANKS'
CORRESPONDENT ACCOUNTS IN THE CBR DECREASED THROUGHOUT
THE WEEK, REACHING A MINIMUM OF R58.7 BILLION ON
FRIDAY.
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TABLE 4: INTERBANK CREDIT
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DATE PERIOD (IN DAYS)
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1 7 14 30 60 90
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JAN 17 MIBID 06.2 10.0 12.0 14.0 17.0 20.0
MIBOR 12.8 20.0 22.0 24.0 27.0 33.0
JAN 18 MIBID 08.2 10.0 12.0 14.0 17.0 20.0
MIBOR 14.6 20.0 22.0 24.0 27.0 33.0
JAN 19 MIBID 05.4 10.0 12.0 14.0 17.0 20.0
MIBOR 12.0 20.0 22.0 24.0 27.0 33.0
JAN 20 MIBID 06.6 10.0 12.0 14.0 17.0 20.0
MIBOR 13.2 20.0 22.0 24.0 27.0 33.0
JAN 21 MIBID 05.5 04.0 07.0 14.0 17.0 20.0
MIBOR 11.5 10.0 17.0 24.0 27.0 33.0
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D. STOCK MARKET RALLY
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AT THE BEGINNING OF THE WEEK, THE STOCK MARKET
EXPERIENCED DOWNWARD PRICE CORRECTIONS AS BOTH RESIDENT
AND NON-RESIDENT INVESTORS DECIDED TO TAKE THEIR
PROFITS FROM RECENT MARKET GAINS. THE POLITICAL
TURMOIL IN THE DUMA AND A WORSENING SITUATION ON WORLD
CAPITAL MARKETS ADDED MORE DOWNWARD PRESSURE. LATER ON
IN THE WEEK, BUYERS ENTERED THE MARKET AND PRICES BEGAN
TO GROW AGAIN. THE DOLLAR-ADJUSTED RTS INDEX BROKE
THROUGH THE 200 MARK ON FRIDAY AND FINISHED DOWN ONLY
0.28 PERCENT FOR THE WEEK IN REAL TERMS.
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TABLE 5: RTS STOCK INDICES
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DOLLAR
DATE RTS INDEX PERCENT CHANGE ADJUSTED
(R) NOMINAL (RUB) REAL (USD)
JAN 17 1271.45 -2.64 -2.37 197.91
JAN 18 1250.10 -1.68 -1.68 194.58
JAN 19 1179.75 -5.63 -5.63 183.63
JAN 20 1232.41 4.46 4.65 192.16
JAN 21 1295.95 5.16 5.19 202.14
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E. INTERNATIONAL RESERVES
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INTERNATIONAL RESERVES OF THE CENTRAL BANK AND THE
FINANCE MINISTRY INCREASED LAST WEEK BY 2.4 PERCENT OR
USD300 MILLION AND REACHED USD12.6 BILLION. THIS IS
THE HIGHEST LEVEL OF INTERNATIONAL RESERVES SINCE
OCTOBER 1998.
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TABLE 6: INTERNATIONAL RESERVES (NOTE 5)
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INTERNATIONAL BLN USD PERCENT CHG PERCENT CHG
RESERVES PREV WK 01.01.00
01.14.00 12.6 2.4 02.4
01.07.00 12.3 -1.6 00.0
12.31.99 12.5 -1.6 02.5(PRNT CHNG 01.01.99)
12.24.99 12.7 5.8 04.1(PRNT CHNG 01.01.99)
12.17.99 12.0 1.7 -01.6(PRNT CHNG 01.01.99)
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F. MONETARY BASE
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THE MONETARY BASE DECREASED THIS WEEK FOR THE FIRST
TIME IN SIX WEEKS. IT DECREASED BY 2.78 PERCENT TO
TOTAL R300.6 BILLION.
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TABLE 7: MONETARY BASE (NOTE 6)
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MONETARY BLN RUBLES PRCT CHNG FROM PRCT CHNG FROM
BASE PREV. WEEK PREV. 4 WK AVG
01.17.00 300.6 -2.78 1.1
01.10.00 309.2 1.05 7.3
12.27.99 306.0 5.81 9.5
12.20.99 289.2 1.58 4.7
12.13.99 284.7 4.44 3.8
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G. CORRESPONDENT ACCOUNTS
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TABLE 9: BALANCES ON CORRESPONDENT ACCOUNTS
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DATE BALANCE (BLN RUB)
01.17.00 72.469
01.18.00 65.929
01.19.00 63.077
01.20.00 68.923
01.21.00 58.657
EXPLANATORY NOTES
1. EXCHANGE RATES: SELT - "SYSTEM OF ELECTRONIC LOT
(CURRENCY) TRADING" - A COMPUTER-BASED OTC-TYPE TRADING
SYSTEM ORGANIZED BY THE MOSCOW INTERBANK CURRENCY
EXCHANGE (MICEX). USD-TOD PRICE IS THE PRICE OF THE
DOLLAR WITH THE SAME DAY DELIVERY. USD-TOM PRICE IS
THE PRICE OF THE DOLLAR WITH DELIVERY ON THE NEXT DAY.
MINIMUM LOT SIZE FOR EACH OF THE DOLLAR INSTRUMENTS IS
USD1OO,000. AVERAGE PRICE IS QUOTED AS THE WEIGHTED
AVERAGE OF ALL THE BIDS AND OFFERS ENTERED INTO THE
SYSTEM BY VARIOUS BANKS.
2. AVERAGE CASH RATES ARE QUOTED AS CALCULATED BY THE
INTER-LINE INFORMATION AGENCY THAT PROCESSES DATA FROM
OVER 500 EXCHANGE POINTS IN THE CITY OF MOSCOW.
3. INTEREST RATES: THE TABLE PROVIDES MOSCOW INTERBANK
BID (MIBID) AND MOSCOW INTERBANK OFFERED RATE (MIBOR) -
- ANNUALIZED AVERAGE BID AND OFFER RATES ON SHORT-TERM
RUBLE LOANS BETWEEN COMMERCIAL BANKS.
4. STOCK INDICES: THE RTS INDEX, IS THE ONLY OFFICIAL
INDICATOR OF THE RUSSIAN TRADING SYSTEM. IT IS
CALCULATED EVERY 30 MINUTES OF THE RTS TRADE SESSION,
STARTING FROM 12:00. IT COMPRISES 60 SHARES OF 35
LEADING COMPANIES. THIS SHARES ARE INCLUDED IN SO-
CALLED CATEGORY "A" LISTING. THE INDEX INDICATES OVER-
THE-COUNTER STOCK PRICES. THE INDEX REPRESENTS THE
RATIO OF THE TOTAL MARKET CAPITALIZATION OF THE SHARES
OF THE COMPANIES SELECTED FOR THE INDEX TO THE TOTAL
MARKET CAPITALIZATION OF THE SAME SHARES AS OF THE
INITIAL DATE MULTIPLIED BY THE INDEX VALUE AS OF THE
INITIAL DATE (31 DECEMBER, 1997) USING A BASE OF 100
BEGINNING SEPTEMBER 1, 1995. THE RUBLE-ADJUSTED INDEX
IS A DERIVATIVE OF THE MAIN DOLLAR INDEX, USING THE
SAME BASE.
5. INTERNATIONAL RESERVES OF THE RUSSIAN FEDERATION
REPRESENT THE AMOUNT OF RESERVE ASSETS OF THE BANK OF
RUSSIA AND FINANCE MINISTRY. THOSE RESERVE ASSETS ARE
COMPRISED OF MONETARY GOLD, SPECIAL DRAWING RIGHTS, THE
RESERVE POSITION IN THE IMF AND OTHER LIQUID FOREIGN
CURRENCY ASSETS. THE LATTER INCLUDE SHORT-TERM
DEPOSITS IN NONRESIDENT AND RESIDENT BANKS, BALANCES IN
CURRENT ACCOUNTS, FOREIGN GOVERNMENT SECURITIES, REPO
AGREEMENTS WITH THESE SECURITIES MADE WITH
NONRESIDENTS, AND OTHER LIQUID ASSETS (ACCRUED INTEREST
ON THESE ASSETS IS NOT INCLUDED). MONETARY GOLD IS
EVALUATED AT USD300 PER TROY OZ. FOREIGN CURRENCY
ASSETS ARE CONVERTED INTO US DOLLARS ON THE BASIS OF
THE CROSS RATES OF FOREIGN CURRENCIES TO THE USD,
CALCULATED USING THE OFFICIAL RATES OF THE RUBLE TO
THESE FOREIGN CURRENCIES, SET BY THE CBR.
6. MONETARY BASE (M1) IS COMPRISED OF CASH AND RESERVES
OF COMMERCIAL BANKS ON DEPOSIT IN THE CBR. IT IS THE
BASIC PART OF THE MONEY SUPPLY (M2).
7. LOMBARD CREDITS, DISTRIBUTED THROUGH AUCTIONS, ARE
AIMED TO PROVIDE THE LIQUIDITY TO THE BANKING SECTOR.
THESE CREDITS ARE EXTENDED TO BANKS ON THE BASIS OF
COLLATERAL (T-BILLS, OR MORE RECENTLY, SHARES).