Worst day for Russian market since 2008 crash
RUSSIAN stocks dived by 11 per cent yesterday, wiping around $60bn (£36bn) from the value of the companies – a loss of value even greater than the $51bn cost of the Sochi olympics.
The country’s central bank hiked interest rates in an effort to stem the flood of money out of the country, attempting to prop up the bond and currency markets.
The central bank raised its one-week auction rate from 5.5 per cent to seven per cent and spent $12bn of reserves on supporting the currency.
But the stampede continued almost unabated.
The rouble fell by around two per cent against the US dollar and 1.7 per cent against the euro – a substantial loss, given the Russian currency had already hit record lows by the end of January.
The Russian government’s 10-year borrowing costs jumped to 8.87 per cent, reflecting international investors’ unwillingness to lend to the government.
Shares and funds exposed to Russia also dived yesterday.
Russian hypermarket Lenta down 14.5 per cent just days after floating in London, while BlackRock’s Emerging Europe fund fell 10.52 per cent.