08/14/1998 14:47:53 FOCUS - Yeltsin backs rouble, market storm abates
NOVGOROD, Russia, Aug 14 (Reuters) - President Boris
Yeltsin, blaming Russia's woes partly on global problems, vowed
on Friday not to devalue the rouble and appealed to parliament
to hold a special mid-recess session to approve crisis measures.
Shares rose so sharply after a slump on what was dubbed
"Black Thursday" that trading was suspended. But dealers said
trade was so thin it did not signify a return of confidence in
the government's ability to fend off a financial collapse.
Interrupting his holiday to visit the mediaeval city of
Novgorod, Yeltsin sought to reassure markets and respond to
blunt U.S. calls to put his house in order.
"There will be no devaluation -- that's firm and definite,"
the 67-year-old president told reporters.
"At the moment, there is a new wave of world financial
crisis and we have to brace ourselves again to be able to deal
with this situation," Yeltsin said. "We've calculated our
reserves and are ready to resist this wave."
Yeltsin's Communist opponents said they were ready to agree
to a session of the State Duma lower house, where they are a
dominant force, but made clear they wanted to take the cabinet
to task rather than discuss its legislative initiatives.
After falling 6.5 percent on Thursday, shares shot back up.
The RTS1-Interfax index was 15.2 percent higher at 1320 GMT
after trade was suspended for a 15-minute cooling off period.
Yields on short-term GKO treasury bills also eased somewhat
but remained around 150 percent and the rouble was weak at 6.37
per dollar, below the central bank's floor for the day of 6.31.
Central bank spokeswoman Irina Yasina said central bank
chief Sergei Dubinin and Kremlin debt negotiator Anatoly Chubais
were returning from holiday this weekend but denied there was
any plan to devalue the rouble while markets were closed.
She said it was "normal" that the rouble was technically
quoted below the daily floor and noted it was well above the
bank's absolute floor for the rouble, set at 7.13 to the end of
the year 2000.
However, some foreign exchange booths shut down in central
Moscow, blaming a lack of hard currency, and others would only
sell dollars at rates of up to eight roubles. Some banks refused
to allow depositors to withdraw dollars from savings accounts in
a first, rare sign of currency trouble for ordinary Russians.
Yasina said the central bank, which stepped in on Thursday
to protect the rouble and avert a crisis of confidence in the
banking system, was helping some of the biggest banks by
extending credits to enable them to meet short-term obligations.
Kremlin spokesman Sergei Yastrzhembsky said later Yeltsin
had signed an appeal to the Duma to break into its summer recess
to hold an extraordinary meeting on government draft laws.
Prime Minister Sergei Kiriyenko, who on Friday was visiting
the city of Kazan east of Moscow, has been urging the Duma to
return next week to pass a dozen tax and other bills which
ministers say form a vital part of anti-crisis austerity
measures intended to restore economic stability.
The Duma has yet to decide whether to convene the session.
Communist leader Gennady Zyuganov sounded sceptical about
Yeltsin's appeal but agreed a parliament session was timely now
that the president had "woken up at last".
He demanded that the first item on the agenda should be a
report by Kiriyenko on how he planned to end the crisis.
"We believe such a session could take place before September
1 and will insist on such an agenda," Kiriyenko said.
Yeltsin, looking well after several weeks holiday, said he
had no intention of interrupting his vacation in the Valdai
lakeland to return to Moscow because of the market upsets.
"That would signify that there was turmoil," he said.
He lashed out at his little-seen Economy Minister Yakov
Urinson, accusing him of taking too academic an approach to the
problems of Russian industry. But asked if he still backed
Kiriyenko, Yeltsin said: "Yes, I will keep him on."
Kiriyenko said in Kazan that he was going to discuss a "wide
range of economic problems" with Yeltsin on Monday but did not
specify whether he would do so in person or by telephone.
The United States, alarmed at the prospect of instability in
the world's second nuclear power, told Moscow in unusually blunt
language to restore confidence after shares hit two-year lows.
"It's critical that the Russian government act quickly to
restore confidence in their economy," White House spokesman Mike
McCurry said after Wall Street was hit by Russian jitters.
President Bill Clinton will visit Moscow on September 1-3
for a summit. McCurry said Washington was working on a way to
help but declined to be drawn on whether there might be more
cash for Russia, which won a $22.6 billion bail-out, led by the
International Monetary Fund, last month.
In Tokyo, a senior official told reporters that deputy
finance ministers from the Group of Seven leading industrial
nations had discussed Russia in a telephone conference call.
Investors were shaken by a letter to the Financial Times
newspaper from financier George Soros calling for the rouble to
be devalued and then fixed against the dollar or the euro -- a
plan instantly rejected by the Russian central bank.
Russian newspapers were critical of the government and
sounded a note of panic. "A few more days like that and we will
be witnessing the final collapse of our national currency," the
main business paper, Kommersant-Daily, said of Thursday's drop.