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Tuesday, September 8, 1998 Published at 16:01 GMT 17:01 UK


Business: The Economy

Rouble row erupts

Russian pensioners want relief from the crisis

A row between Russia's government and the country's Central Bank has escalated with both sides accusing the other of mishandling the economic crisis.

Boris Fyodorov, the acting deputy premier and tax chief, criticised the lack of support for the commercial banks by the Central Bank and said it should "stop the games with the rouble rate and allow it to be freely determined by the market."


[ image: Russian's are scrambling to change their roubles into dollars]
Russian's are scrambling to change their roubles into dollars
He said: "At today's rate, the Central Bank could easily buy all the roubles in circulation."

He called for the Central Bank to use its reserves to support the banking system.

No plan to halt fall

Both the government and the Central Bank believe that the rouble has fallen too far.

It was trading at 6.2 to the dollar before the crisis began less than a month ago.

However on Tuesday you needed around 20 roubles to buy a dollar at currency exchange booths throughout the capital.

Neither the government nor the Central Bank has announced a plan to halt the slide of the rouble, which is currently at the mercy of the market.

But former Central Bank Chairman Sergei Dubinin, who offered his resignation on Monday, was sharply critical of the government, saying it had failed to implement an effective rescue package.


Richard Gray of Bank of America discusses the Russian financial crisis on BBC World Service Television
He said: "Under my leadership, the Central Bank did not print worthless money.

"However, monetary policies cannot forever compensate for weaknesses in tax collection and the management of the national debt."

It is the second day in a row that Moscow's interbank currency exchange has failed to provide a formal rouble rate against the US dollar.

It leaves the market without an agreed upon level for the Russian currency.

Ordinary Russians suffering

Since the crisis hit, people have been scrambling to get their money out of the banks and prices have soared.

Central Bank hard currency reserves are now down to $11bn, about half of what they were a year ago.


[ image: The rouble street rate plummets]
The rouble street rate plummets
Government officials also said the federal budget for the rest of 1998 and 1999 would have to be revised.

The interim cabinet are due to discuss an emergency budget on Thursday.

Many Russians who receive their salaries in fast-devaluing roubles are stocking up on household items, clothing and basic foodstuffs.

Automatic banking machines have stopped operating in Moscow and elsewhere, and many businesses have stopped honouring credit cards, making it difficult for some people to obtain cash or make payments.





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