08/26/1998 08:44:45 FOCUS-Russian central bank voids rouble/dlr trade
(Releads with rouble fall, markets, adds details)
By Adam Tanner
MOSCOW, Aug 26 (Reuters) - Russia's central bank voided
morning trade in the rouble on Wednesday to bar further plunges
in the currency as acting Prime Minister Viktor Chernomyrdin
said he was deeply unhappy with the bank's performance.
Central bank officials appeared paralysed by the chaos on
Russian financial markets, and in desperation they announced
that morning rouble trade was invalid.
Trading was suspended on the Moscow Interbank Currency
Exchange (MICEX) soon after it started because of a five-percent
drop from Tuesday's fix against the U.S. currency. The trade --
coming after a 10 percent decline on Tuesday -- was then
declared null and void.
The Reuters index of leading shares was down 9.5 percent at
0800 GMT on very low trade volumes.
"Financial and economic policy is a question to which I am
giving my attention minute-by-minute," Itar-Tass quoted
Chernomyrdin as saying. "I am extremely dissatisfied with the
work of the central bank over the last two days."
The report said he would talk to the bank's chief, Sergei
Dubinin later on Wednesday.
President Boris Yeltsin summoned Chernomyrdin back from the
political wilderness on Sunday and fired the four-month old
cabinet of reformer Sergei Kiriyenko, 36, saying Russia needed a
"heavyweight" at the helm.
It was not clear if Chernomyrdin was hinting at changes in
the central bank -- where Dubinin has been in charge since
October 1995 -- or just playing to populist sentiment unhappy
about last week's devaluation of the rouble.
The rouble fell to 8.26 roubles per dollar by 0700 GMT and
MICEX quickly suspended trade. It is already a third lower since
it was devalued from about 6.2 to the dollar ten days ago.
On Tuesday, the rouble tumbled to 7.88 from 7.14 to the
dollar -- the worst fall in a single day since plunging on what
became known as Black Tuesday in October 1994.
With the rouble spiralling lower and ordinary Russians
alarmed about price rises, Chernomyrdin said any delay in his
confirmation by parliament would exacerbate the situation and he
warned of tough economic decisions ahead.
But for all his experience Chernomyrdin, who served Yeltsin
loyally as prime minister for five years until his abrupt
sacking in March, faces a daunting task in winning parliamentary
support and halting Russia's precipitous financial decline.
"Objectively it could turn out that the authorities will
have to take very tough measures for a resolution in the
financial-economic sector," Chernomyrdin was quoted by Russian
news agencies as saying on Tuesday evening.
Yeltsin, who is under fire for the devaluation and sudden
change in the government, was nowhere to be found on Wednesday,
and calls to his receptionist went unanswered.
"We don't know what he is doing," a spokesman said. "We have
no official information."
The central bank for its part has weakened ability to
support the rouble as its reserves have fallen sharply in recent
weeks. Its foreign exchange and gold reserves fell to $15.1
billion on August 14 from $17.0 billion on August 7.
Retailers of everything from pizza to hi-tech electronics
scrambled to raise prices and people rushed to banks to try to
get at their money.
"People are also withdrawing en masse their rouble and
dollar savings from banks," said a cashier in the
Omskpromstroibank in the Siberian city of Omsk.
Late on Tuesday, the government announced some details of a
plan to restructure $40 billion worth of domestic debt into
longer-term paper, but besieged officials were still unable to
provide further information on the plan on Wednesday.
Western analysts are calling the scheme an effective default
which will hit investor confidence in Russia for years to come.
As part of his drive for broader political support
Chernomyrdin was expected on Wednesday to hold talks with
Alexander Lebed, the ambitious governor of Siberia's Krasnoyarsk
region and a likely future rival for the presidency.
The Communist-dominated lower house of parliament, the State
Duma, wants him to reverse Kiriyenko's reformist course and
bring opposition parties into his cabinet.
"The government will have to be formed on a coalition basis,
if they want to rescue the country from its crisis together,"
said Gennady Seleznyov, the Duma's communist speaker.
Chernomyrdin has agreed to jointly draw up documents with
parliament outlining an economic policy and a political deal
which Seleznyov said would mean Yeltsin giving up some power.
Yeltsin, whose erratic behaviour and lapses of concentration
have sparked fierce criticism, could have less influence over
the new government, which will be shorn of key liberals like
former deputy prime minister Boris Nemtsov.