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Russia approves $86bn bank rescue | Russia approves $86bn bank rescue |
(about 2 hours later) | |
Russia's lower house of parliament, the Duma, has approved a raft of measures worth $86bn (£51bn) to assist banks hit by the credit freeze. | Russia's lower house of parliament, the Duma, has approved a raft of measures worth $86bn (£51bn) to assist banks hit by the credit freeze. |
The government will make $50bn available to banks and firms that need to refinance foreign debt. The rest will be available as loans to banks. | The government will make $50bn available to banks and firms that need to refinance foreign debt. The rest will be available as loans to banks. |
The package is designed to restore confidence in Russian banks and revive shares, which have seen steep falls. | The package is designed to restore confidence in Russian banks and revive shares, which have seen steep falls. |
Trade on Russian stock exchanges has been suspended since Wednesday. | Trade on Russian stock exchanges has been suspended since Wednesday. |
Trading in the Moscow Interbank Currency Exchange (Micex) index and the Russian Trading System (RTS) exchange was stopped after falls of more than 10% in the first hour of trade on Wednesday. | |
The Micex was scheduled to reopen on Friday. | |
But fears that Russian shares would be dumped after a climate of fear saw a rout across European and Asian stock markets, prompted the order from the regulator, analysts said. | |
"The RTS and MICEX will not be able to escape contagion from the rest of the world," Uralsib strategist Chris Weafer said. | |
Liquidity problems | |
The falls in Russia and elsewhere have been blamed on panic selling by global investors fearful of a deep worldwide recession. | The falls in Russia and elsewhere have been blamed on panic selling by global investors fearful of a deep worldwide recession. |
Russian shares were also hit in August amid concerns about the conflict between Russia and Georgia. | Russian shares were also hit in August amid concerns about the conflict between Russia and Georgia. |
The steep decline in oil prices has also taken its toll with energy firms accounting for about two thirds of the Russian stock indexes. | The steep decline in oil prices has also taken its toll with energy firms accounting for about two thirds of the Russian stock indexes. |
Analysts say the falls have been exaggerated as a number of Russian oligarchs have faced margin calls on loans that they took to expand their business interests. | |
The forced sale of shares they had used as collateral for the loans has played a part in depressing stocks. |
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