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Russia halts Friday trade
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August 27, 1998: 1:38 p.m. ET
Central bank pulls plug on ruble exchange; Kremlin denies Yeltsin quit
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NEW YORK (CNNfn) - The Russian central bank, which earlier Thursday halted overseas currency trading after admitting it no longer could support the beleaguered ruble, now says trading won't resume for the rest of the week.
The central bank suspended trade in the ruble against all foreign currencies for the second straight day Thursday, a day after the ruble-dollar trade was suspended and the ruble fell more than 40 percent against the mark.
The bank now says trading won't resume Friday on the Moscow Interbank Currency Exchange.
Extreme measures
Moscow leaders said Thursday they are considering extreme measures to stop the ruble's meltdown and get the rocky financial situation back on solid ground
Russia's acting Prime Minister Viktor Chernomyrdin and parliament are mulling ideas including price controls and a halt to ruble convertibility, a key Chernomyrdin ally said.
Alexander Shokhin, head of Chernomyrdin's parliamentary party, said a document already is being drafted by the acting government and parliament's lower house, the Duma, that will contain ideas that once might have seemed "exotic" but now seem necessary.
Various media reports indicate the options might including privatizing some industries and giving President Boris Yeltsin an easy out -- a contract to leave office while retaining certain privileges.
The Kremlin Thursday dismissed rumors in world financial markets that Yeltsin already had resigned.
"It's just impossible that such a thing could have happened without us telling you," an official in the Kremlin press office said.
Rumors swirling through the financial markets, however, suggest Russia, under Chernomyrdin's regime, will revert to its communist past, or at least reinstate elements of the Communist party back into the government. Already, a legislative commission in the Russian government largely run by Communists, said they reached an economic agreement to change economic course.
Thursday trade at the Interbank Currency Exchange opened at 8.2 rubles per dollar against the offered rate of 9.5. The central bank had set an artificial rate of 7.86 Wednesday, and trade was suspended within minutes Thursday. On the street, black market traders were getting as much as 12 rubles to the dollar.
A central bank order said reserves had dropped to $13.4 billion on Aug. 21 from $15.1 billion a week earlier.
Shares plummet
The currency's fall prompted a steep decline in the stock market as well as worried investors jumped ship. Russia's main shares index, the RTS1-Interfax, fell 17.3 percent Thursday to a record low of 63.20.
Russia's dramatic economic decline stands in sharp contrast to last year's rapid growth, when its market was up 150 percent, then the fastest growing market in the world.
The ruble has been sliding since Yeltsin sacked his previous prime minister Sergei Kiriyenko Sunday and reinstated Chernomyrdin -- widely seen as his eventual successor -- only five months after removing him from office.
Yeltsin also announced a short-term debt repayment plan that leaves overseas investors out in the cold.
Holders of Russian bonds face losses that could top $33 billion, according to conservative estimates quoted by Britain's Financial Times Thursday.
Funds run by investment guru George Soros, who earlier this month sent the ruble tumbling after suggesting a devaluation of the currency, is reported to have lost some $2 billion alone.
Rumors are circulating in Russia that Chirnomyrdin, as presumed successor to Yeltsin, already is staging a coup to win over control of the economy from Yeltsin.
"There has been mention that this creeping coup has already taken place," said Stephen Green, a principal with Renaissance Capital. "It's clear that Chirnomyrdin is already in control at this point. Yeltsin probably won't have much to do with the economy and political situation going forward."
That doesn't bode well for investors. Chirnomyrdin historically has had little interest in reform and reportedly has proposed the establishment of a new government that would look more like the former Soviet regime.
From Washington to Paris, world leaders urged Russia to take stern steps to correct its financial upheaval.
A spokesman for Chernomyrdin said the prime minister is closely following the activity of the markets and is prepared to take action if necessary.
"It's very difficult to say because right now, as it stands for now, you play it step by step, because the situation is so difficult, because you have to watch the markets, you have to watch the ruble," spokesman Konstantin Voitsekhovich said. 
-- from staff and wire reports
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