Ruble Takes Biggest Hit Since Early July

Ruble Takes Biggest Hit Since Early July

The ruble fell 2 percent to 32.24 per dollar, its biggest decline since July 10. The MICEX Index fell 3.5 percent, after earlier sliding as much as 3.9 percent, the steepest intraday drop since July 6.

Urals crude, the country’s main export, fell 3 percent to $68.09 per barrel in Monday trading.

The ruble is “the iconic high-yielding, emerging market currency that people don’t want to have anything to do with when risk conditions are looking a bit unsupportive,” Manik Narain, strategist at Standard Chartered in London, said Monday. “There is some nervousness that markets have been pricing in too fast a pace of global recovery.”

Rosneft, the nation’s biggest oil producer, dropped 5.2 percent to 179.70 rubles a share. Shares of Norilsk Nickel, the country’s largest mining company, fell 3.5 percent to 3,234.46 rubles. Novolipetsk Steel, Russia’s biggest producer of the metal by market value, lost 2.1 percent to 78.05 rubles.

“The correlation between oil and the ruble over the course of this year is going to remain very strong,” Narain said. “It’s so critical for the management of cash flow in Russia and also given the deteriorating fiscal balance.”

Russia’s budget deficit widened in the first seven months to the equivalent of 4.3 percent of gross domestic product as the government spent 924 billion rubles ($28.7 billion) more than it collected, the Finance Ministry said Aug. 12. The gap could reach 9.4 percent of GDP this year, it forecasts.

Energy, including oil and natural gas, accounted for 68.8 percent of Russia’s exports to the Baltic states and countries outside the former Soviet Union in the first six months, according to the Federal Customs Service.

The ruble weakened 0.9 percent to 45.41 per euro. The movements against the dollar and the euro left the ruble down 0.7 percent at 38.15 against the Central Bank’s target currency basket, which it uses to manage swings that hurt Russian exporters.

The drop in Chinese equities “is driving the entire commodity rally to an end,” Shahin Vallee, an emerging-market currency strategist at BNP Paribas in London, said Monday. “You have a number of people with long ruble positions that are now reconsidering them on the back of something that looks like a change of outlook for commodities prices.”

China and Russia decreased investments into American securities, although China stayed America’s largest investor of financial instruments.

Despite the fact they decreased their investments from 801.5 billion dollars in May to 776.4 billion in June, Beijing is still the largest foreign investor of American securities.

At the same time Russia decreased its input in American securities by 3.7 % or 119.9 billion dollars.

It has been showed that it’s trend to invest in American securities. In June 91 billion dollars of securities have been bought.

Japan is the second owner of American securities, which increased its investments by 5.1 % or 712 billion dollars.

bne
August 18, 2009

Russian farmers had already brought in 53.8m tons of grain as of August 17, which is 10m tons down on last year's level, reports Interfax citing the Agriculture Ministry.

However, last year Russia enjoyed a very strong harvest and this year's result will still be good. Russia has already significantly boosted grain exports and the sector remains one of the more attractive.

The main factor behind the lower harvest is a reduction in yield, which has totalled 2.71 tonnes per hectare so far this year versus 3.07 tonnes in 2008, reports Interfax.

The Agriculture Ministry expects the total harvest to reach 85m tons this year against to 108.1m tons in 2008.

Business, Energy or Environmental regulations or discussions

Anti-Monopoly Service Wants Unitary Enterprises Eliminated

http://www.themoscowtimes.com/article/1009/42/380894.htm
18 August 2009Vedomosti

The Federal Anti-Monopoly Service has proposed eliminating all state and municipal unitary enterprises that aren’t involved in strategic sectors, saying they stifle competition and are used to misappropriate budget funds.

State enterprises, known by their acronym as FGUPs, and municipal enterprises, or MUPs, are among the biggest hindrances to competition, the anti-monopoly watchdog said in a report on its web site. They frequently perform oversight, manage property and provide paid services to citizens, and they get preference for budget funds, the report said.

Often the money is removed from state control, which boosts the chances for corruption, it said.

The service proposed privatizing all FGUPs and MUPs not involved in strategic sectors. The enterprises could also be reformed as state or commercial organizations that are 100 percent state owned, said Alexei Sushkevich, director of the service’s analytical department.

The FGUPs were recognized as inefficient 15 years ago, and the government has been trying to reduce their number through privatizations since 1994, with varying success, a Cabinet source said.

“It’s even harder with the MUPs,” he said, since no one knows how many exist. “There are at least 100,000.”

On Jan. 1, 2008, according to the Federal Property Management Agency, the government owned 5,709 FGUPs, or 824 fewer than a year earlier. The agency was supposed to privatize the property of 440 unitary enterprises last year. In 2009, 235 FGUPs are supposed to be privatized.

The Transportation Ministry has been reforming the way it uses FGUPs for more than five years to decrease their number and make sure that budget funds are used more efficiently, a ministry official said.

“Sure, not everything is working out, but that doesn’t mean that you should stop trying,” the official said.

Evraz Group, Lukoil, OGK6, Rosneft: Russian Equities Preview

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZU1fvjs6vUU

By Anastasia Ustinova

Aug. 18 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.

The 30-stock Micex Index fell 3.5 percent, the most since July 6, to 1,035.4 in Moscow. The RTS Index dropped 5.1 percent to 1,005.77.

Evraz Group SA (EVR LI): Russia’s second-largest steelmaker said output was affected after an accident shut Russia’s largest hydroelectric power plant and reduced electricity supply to the company. Evraz fell 5.8 percent to $21.88 in London.

OAO Lukoil (LKOH RX): Russia’s largest non-state oil producer said it plans annual production of 13 billion cubic meters of natural gas and 16 million metric tons of oil and gas condensate from the Caspian Sea by 2020. Lukoil declined 3.02 percent to 1,451 rubles on the Micex Stock Exchange.

OAO OGK-6 (OGK6 RX): Siberian electricity prices may rise from 5 percent to 7 percent after an accident today closed Russia’s largest hydropower station, RIA Novosti said, citing Energy Minister Sergei Shmatko.

OGK6 fell 4.9 percent to 58 kopeks.

OAO Rosneft (ROSN RX): Crude oil for September delivery fell to a two-week low on the New York Mercantile Exchange as global equities dropped and the U.S. dollar advanced, reducint the appeal of commodities to investors.

Rosneft, Russia’s biggest oil producer, dropped 5.2 percent to 179.70 rubles.

To contact the reporter on this story: Anastasia Ustinova in St. Petersburg at austinova@bloomberg.net.

Last Updated: August 17, 2009 22:00 EDT

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