Oil-rich Russia reels as Wall Street crisis spreads
Last Updated: Thursday, September 18, 2008 | 5:40 AM ET
CBC News
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Stock markets in Russia suspended trading for a second consecutive day Thursday as the government tried to stem the dizzying plummet in share prices and restore confidence in the economy.
News agencies are quoting the Russian Finance Minister Alexei Kudrin as saying the markets will remain closed until Friday.
Financial regulators and government officials were struggling to keep the crisis now battering Russia's economy from turning into a repeat of the 1998 meltdown.
The MICEX and RTS exchanges plummeted to their lowest points in nearly three years Wednesday, prompting regulators to call a halt to trading at midday.
The two exchanges failed to open on time Thursday and the MICEX resumed limited trading by 11 a.m. local time.
In a statement, the exchange called the situation in Russian markets on Wednesday "extraordinary," but officials said they were waiting for a decision from financial regulators before full trading could resume.
The Kremlin has struggled to restore confidence in the banking system with a wave of emergency loans, fearing a repeat of the 1998 economic crisis, which saw the ruble devalued, default on the country's sovereign debt, and widespread bank foreclosures.
Russia's situation is markedly different now — the government has huge cash reserves and virtually no debt thanks to its thriving petroleum industry. But analysts still warn that that disaster could loom if officials mishandle the turmoil.
Following emergency talks, Central Bank officials on Thursday announced new additional measures to ease the strain on Russian banks, which are facing a liquidity squeeze amid a crisis of confidence between lenders.
Central Bank chairman Sergei Ignatiev called on lenders to respond sensibly to the new measures, which include lowering reserve requirements for loans.
"We hope that banks will spend these funds not on long-term crediting or other kinds of crediting of clients," he said, "but on the maintenance of the necessary volume of their liquidity and on making settlements."
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