posted at 04:50
Author Name: Tomas Hirst
The Rouble Is Collapsing At The Worst Possible Time For Russian Businesses
The Russian rouble is collapsing, falling over 8% on Monday. This is terrible news for Russian corporates, which are due to make $35 billion of debt repayments in December. As you can see, falls in the rouble over recent months have not been too much of a problem for Russian companies as debt repayments have been relatively modest. The Russian central bank has limited currency repo operations - whereby Russian banks can access the central banks dollar reserves in exchange for collateral. This is widely seen as a response to the events of 2008 where Russian banks used cheap dollar liquidity provided by the central bank to short the rouble, compounding the currency's problems. Companies still have to find the money to fund the almost 1.9 trillion rouble bill even with limited access to central bank funding. Perhaps this helps explain the announcement on Monday that the Russian government has decided to sell a 19.5% stake in the country's largest oil company, Rosneft. The question now is at what price investors will be willing to take a risk on Russian firms - and how low the rouble can go.

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