|
Yeltsin fires Chubais
|
 |
August 28, 1998: 9:52 a.m. ET
Russian president dismisses top negotiator; stocks begin recovery
|
NEW YORK (CNNfn) - Returning to the Kremlin after days at a remote retreat, Russian President Boris Yeltsin Friday proved he's not done cleaning his political house by firing the country's top negotiator with international financial institutions.
Yeltsin dismissed reformer Anatoly Chubais, Russia's former privatization chief who played a pivotal role in winning a multi-billion dollar loan from the International Monetary Fund in July. The Kremlin had no immediate response to the report.
Meanwhile, the Russian ruble regained some of its losses against the dollar on the interbank electronic trading system at the Moscow Interbank Currency Exchange.
Dealers credited the gains to improved sentiment in Western markets.
"The foreign exchange market has livened up," a MICEX official said. "Starting yesterday evening, firm bid and offer quotes for U.S. dollars appeared on the MICEX electronic trading system SELT."
The average rate for today delivery, he said, was 12.89 rubles to the dollar on reported turnover of $72.6 million.
The central bank, which canceled three regular sessions of foreign exchange trading at MICEX, including Friday, set its official Friday rate at 7.86 rubles to the dollar.
Russian stocks also rebounded, with the Reuters composite index of major share markets up 2.74 percent to 51.61 in afternoon trading on 66 million shares volume. The RTS1-Interfax index was up 6.44 percent to 67.27, off its all-time low of 61.15. .
Bond policy
The Russian central bank also said Friday it will limit the total nominal value in circulation of new short-term bonds to 10 billion rubles and the paper will be offered to all banks with a central bank license, a senior bank official said Friday.
"As of today, we decided to set the upper limit of not more than 10 billion (rubles). This is how much nominal there can be in circulation," the head of the bank's open-market operations department, Kostantin Korishchenko, said.
The fate of Russia's political future may be decided Monday, when the Communist-led lower house of parliament convenes to vote on whether to endorse acting Prime Minister Viktor Chernomyrdin.
Chernomyrdin said Friday he had the backing of Russian President Boris Yeltsin and two key potential rivals for the premiership, Interfax news agency reported.
Quoting Chernomyrdin after he met Yeltsin and possible rivals Yegor Stroyev, the upper house speaker, and Moscow Mayor Yuri Luzhkov, Interfax said he believed he had full support for his urgent anti-crisis program and there was no time to waste in political wrangling.
But the Duma, smelling blood, is putting heavy pressure on Yeltsin and Chernomyrdin to share more power with the legislature and to effectively reverse Russia's post-Soviet course of market reforms.
Parliament has drawn up a document that may include a return to price controls, a plan to privatize some industries, and a halt to the ruble's convertibility and money-printing to fill a budgetary gap and rescue the stricken banking system.
Despite rumors swirling throughout the financial markets, Yeltsin's spokesman said the Russian president is not preparing to step down. Yeltsin was due to meet Chernomyrdin at mid-day.
Chernomyrdin, who is not viewed as a proponent of economic reform, is widely believed to be Yeltsin's successor. That doesn't bode well for overseas investors.
Under Russia's newly instituted debt repayment plan, 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, reportedly have lost some $2 billion alone.
Ruble meltdown
The ruble has fallen sharply since Yeltsin fired his government, including previous prime minister Sergei Kiriyenko, Sunday and reinstated Chernomyrdin only five months after ousting him from office.
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.
Overseas currency trade will not resume Friday.
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.
On the street, black market traders are getting as much as 12 rubles to the dollar as panic stricken Russian continue their flight to quality currency.
A central bank order said Thursday reserves had dropped to $13.4 billion Aug. 21 from $15.1 billion a week earlier. It also said it no longer could financially afford to support the free-falling currency. 
--from staff and wire reports
|
|
|
|
|
|
CNNfn world markets
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
