Russian Market Plunges
Russian authorities stopped trading temporarily on the Moscow stock market Tuesday as investors got caught up in the global flight away from emerging markets.
Apparently, the halt stemmed the outgoing tide as the benchmark Russian Trading System Index (RTS) pared its losses to end the day down 109.90, or 9.1 percent, from 120.91. At the time trading halted, the blue-chip barometer, which lost 9 percent in the previous session, was down 11.8 percent.
So far this year, the RTS index has plunged 72 percent and lost 81 percent from its peak last October.
The stock market's main index continued to sink this week despite a $300 million installment of a World Bank loan that Russia received on Monday, part of a $22.6 billion international bailout package.
Traders said the ruble was also slightly lower despite the heavy intervention by the Russian Central Bank. Investors worry the international loan won't be enough to allow Russia to prop up its currency. Interest rates on the government's short-term debt rose to 150 percent as the Central Bank tried to protect the ruble.
Before the suspension of trading was announced, Deputy Prime Minister Viktor Khristenko tried to calm the jittery markets, saying the government will honor its foreign deb. "The question of Russia's default is not on the agenda," he said, acknowledging that the government is having trouble selling its debt either on the domestic exchange or as eurobonds.
The World Bank and the International Monetary Fund have demanded that Russia carry out a series of economic reforms, especially improving its weak tax collection system, which would improve the government's balance sheet and allow it to pay its bills without borrowing.
President Boris Yeltsin's government will ask parliament to approve seven new bills at a special legislative session next week.
The government was able to push through only part of an austerity program last month because Communist Party legislators and other hard-liners in parliament rejected a number of measures to raise taxes.
Chances that lawmakers will approve the new bills are low, the chief of parliament's budget committee, Alexander Zhukov, was quoted as saying by ITAR-Tass.