**RUSSIAN ECONOMICAND FINANCIAL DEVELOPMENTS**

**FOR WEEK ENDINGOCTOBER 8, 1999**

 

13OCT 99

SOURCE: US EMBASSYMOSCOW

 

---------------------------

FINANCIAL MARKETINDICATORS

---------------------------

 

1. FINANCIAL MARKETTRENDS

 

THE OFFICIALRUBLE/USD EXCHANGE RATE SLID 70 KOPECKS AT

THE BEGINNING OF THEWEEK TO R25.9/USD, RECAPTURING

SOME LOST GROUNDLATER IN THE WEEK TO CLOSE AT

R25.72/USD.  LIQUIDITY WAS HIGH, SHORT-TERM INTEREST

RATES EASED DURINGTHE PERIOD, AND THE STOCK MARKET

GAINED 10 PERCENT ONSLIGHTLY HIGHER VOLUMES.

INFLATION FORSEPTEMBER INCHED UP TO 1.5 PERCENT

COMPARED TO 1.2PERCENT IN AUGUST.  IN THE PREVIOUS

WEEK THE CBR'SRESERVES INCREASED BY USD 300 MILLION TO

USD 11.2 BILLION,THE FIRST INCREASE IN FOUR WEEKS.

MONEY BASE CONTINUEDTO DECLINE FOR THE THIRD

CONSECUTIVE WEEK.

 

FEDERAL CASHREVENUES WERE R47.5 BILLION IN SEPTEMBER,

A TOUCH BELOWAUGUST'S COLLECTIONS OF R48.3 BILLION.

THE CBR ANNOUNCEDTHAT 13O BANKS ARE UNDERGOING

RESTRUCTURING, BUTAGROPROMBANK HAD BEEN DECLARED

INSOLVENT ANDINKOMBANK'S COURT APPEAL TO HALT ITS

BANKRUPTCYPROCEEDINGS WAS REJECTED.

 

---------------------------------------------

2. ECONOMIC ANDFINANCIAL MARKET DEVELOPMENTS

---------------------------------------------

 

-- ACCORDING TO THETAX MINISTRY, TAX COLLECTIONS IN

SEPTEMBER TOTALEDR29.4 BILLION, 27 PERCENT HIGHER THAN

THE BUDGET TARGET.

 

-- THE FINANCEMINISTRY'S PRELIMINARY BUDGET DATA FOR

SEPTEMBER INDICATESTHAT TOTAL REVENUES WERE R47.5

BILLION COMPARED TOR48.3 BILLION IN AUGUST.

EXPENDITURES WERER48.1 BILLION COMPARED TO R50 BILLION

IN AUGUST.  FOR THE FIRST 9 MONTHS OF 1999 THESTATE

WAS ABLE TO RAISER366 BILLION IN REVENUES.

--------------

3.  BANK ALERT

--------------

 

-- SBERBANK PURCHASEDMORE THAN 15 TONS OF GOLD AT

MARKET PRICES FROMPRODUCERS THIS YEAR, 120 PERCENT

MORE THAN LAST YEAR.

 

-- AGROPROMBANK WASDECLARED INSOLVENT.  ACCORDING TO

THE TEMPORARYMANAGEMENT, THE DEBT OF THE BANK EQUALED

R17.7 BILLION AS OFTHE END OF JUNE WHEN THE BANK'S

LICENSE WAS REVOKED.

 

-- MOSCOW ARBITRARYCOURT DECLINED THE APPEAL OF

INKOMBANK CONCERNINGTHE REVOCATION OF ITS LICENSE BY

THE CBR.  IN THE NEAR FUTURE THE BANKRUPTCYPROCEDURES

WILL BE INITIATED.

 

-- ACCORDING TO THEHEAD OF THE METHODOLOGY

SUBDEPARTMENT OF THECBR'S DEPARTMENT OF PRUDENTIAL

BANKING CONTROLVLADIMIR SAFRONOV, 130 BANKS ARE UNDER

THE PROCESS OFRESTRUCTURING.  13 BANKS OUT OF THE

TOTAL HAVE A CAPITALDEFICIT OF R35 BILLION.

---------

4. PRICES

---------

 

INFLATION INSEPTEMBER TOTALED 1.5 PERCENT COMPARED

WITH 1.2 PERCENT INAUGUST.  SINCE THE BEGINNING OF THE

YEAR INFLATION HASBEEN 31.4 PERCENT.  THE AVERAGE

DAILY INFLATION RATETOTALED 0.049 PERCENT COMPARED TO

0.037 PERCENT INAUGUST.

---------------------------

5. FINANCIAL MARKETTABLES

--------------------------

 

-----------------

A. RUBLE WEAKENS

-----------------

 

IN THE BEGINNING OFTHE WEEK, THE RUBLE WEAKENED SHARPLY ON

MODERATE VOLUMES ONTHE "USDTOD" SESSION.  ONMONDAY, THE TRADE

VOLUME ON THEAFTERNOON SESSION FOR THE FIRST TIME WAS HIGHER

THAN ON THE UNIFIEDSESSION FOR THE "USDTOD". ON TUESDAY, SUPP

EQUALED DEMAND OFDOLLARS IN THE UNIFIED SESSION, AND THE CBR

HAD TO INTERVENEONLY SLIGHTLY TO SUPPORT RUBLE.  THE AMOUNT OF

INTERVENTION WASESTIMATED TO EQUAL USD30-40 MILLION. LATER IN

THE WEEK, THE RUBLEBEGAN TO RECOVER AND THE SUPPLY OF DOLLARS

WAS 1.5 TIMES HIGHERTHAN THE DEMAND (USD275 MILLION VS. USD180

MILLION ONWEDNESDAY).  TRADE ACTIVITY OF THEMARKET PLAYERS

STAYED ON ARELATIVELY HIGH LEVEL THROUGHOUT THE WEEK.  FOR THE

WEEK, RUBLE LOST 2.2PERCENT ON THE "USDTOD" SESSION AND 1.6

PERCENT ON THEAFTERNOON SESSION FOR THE "USDTOM".

 

TABLE LA:  RUBLE RATES -- MICEX SELT TRADING (NOTE1)

 

 ------------------------------------------------

           USD-TOD   USD-TOD   USD-TOM   USD-TOM

   DATE    AVERAGE   VOLUME  AVERAGE   VOLUME

            PRICE   (USD MN)    PRICE   (USD MN)

 ------------------------------------------------

 10/04/99  25.4871    127.42   25.7636    138.80

 10/05/99  25.9024     135.55   25.8667     92.80

 10/06/99  25.7813     178.52   25.7375    131.10

 10/07/99  25.7188     165.05   25.7590     36.80

 10/08/99  25.7552     206.41   25.7931     62.90

 

TABLE LB:  RUBLE RATES -- CASH RATES AT EXCHANGEPOINTS

(RUBLES PER USD)(NOTE 2)

-------------------------------------------------

                    PRCT CHNG           PRCTCHNG

   DATE    AVERAGE   AGAINST  AVERAGE   AGAINST

            BUY    WEEKAGO    SELL    WEEK AGO

 -------------------------------------------------

 10/04/99   25.45        0.99   25.81        1.37

 10/05/99   25.66        2.23   26.03        2.64

 10/06/99   25.59        2.11  25.89        2.41

 10/07/99   25.54        1.83   25.80        2.02

 10/08/99   25.60        1.75   25.87        1.69

 

TABLE IC:  RUBLE RATES-- CBR OFFICIAL EXCHANGERATE

 -----------------------------------------

                     PRCT CHNG  PRCT CHNG

   DATE    OFFICIAL   AGAINST    AGAINST

            RATE     WEEKAGO   09/08/98

 -----------------------------------------

 10/04/99  25.2000       -0.32      48.32

 10/05/99  25.4900        0.87      50.03

 10/06/99  25.9000        2.70      52.44

 10/07/99  25.7800        2.79      51.74

10/08/99  25.7200        2.67      51.38

 

-------------

B. OFZ MARKET

-------------

 

ACTIVITY ON THESECONDARY OFZ MARKET WAS LOW THROUGHOUT

ALL WEEK.  TRADE VOLUMES WERE LOW.  YIELDS OF THE LONG

OFZ ISSUES STARTEDAT 82-83 PERCENT P.A. IN THE

BEGINNING OF THEWEEK GOING UP SLIGHTLY BY FRIDAY TO

82.5-83.5 PERCENTP.A.

 

------------------------------

 TABLE 3A: OFZ SECONDARY MARKET

 ------------------------------

 

         10.04.99  10.05.99  10.06.99  10.07.99 10.08.99

 TOTAL

 TRADE      N/A       N/A       N/A       N/A       N/A

 VOLUME

(MLN RUB)

 ---------------------------------------

C. SHORT-TERMINTERBANK RUBLE DOWN A BIT

----------------------------------------

 

SHORT-INTERBANKRUBLE LOAN MARKET RATES CONTINUED TO

DECREASE THROUGHOUTTHE WEEK REACHING A LOW OF 7.2

PERCENT P.A. ONFRIDAY FOR OVERNIGHT LOANS.

BALANCES ON BANKS'CORRESPONDENT ACCOUNTS IN THE CBR

STAYED RELATIVELYHIGH THROUGHOUT THE WEEK, DROPPING

FROM R59.8 BILLIONON MONDAY TO R54.4 BILLION ON

FRIDAY.

 

 --------------------------

 TABLE 4: INTERBANK CREDIT

 --------------------------

 

  DATE                     PERIOD (IN DAYS)

  -----------------------------------------------------

                   1     7     14     30     60     90

  -----------------------------------------------------

 

 OCT 04   MIBID  14.8   20.0   23.0   25.0  24.0  22.0

          MIBOR   20.0   25.0  28.0   31.0   30.0  27.0

 

OCT 05   MIBID   13.4  19.0   23.0   26.0   24.0  22.0

          MIBOR   18.2   22.0  27.0   31.0   28.0  26.0

 

 OCT 06   MIBID  10.0   19.0   22.0   25.0  23.0  21.0

          MIBOR   15.2   26.0  30.0   34.0   31.0  29.0

 

 OCT 07   MIBID  08.4   19.0   22.0   25.0  23.0  21.0

          MIBOR   13.8   28.0  32.0   36.0   33.0  31.0

 

 OCT 08   MIBIO  07.2   10.0   13.0   20.0  23.0  25.0

          MIBOR   13.2   20.0  23.0   30.0   33.0  40.0

 

--------------------------

 

0. STOCK MARKETRECOVERING

--------------------------

 

AFTER BEING STAGNATELAST WEEK, STOCK MARKET EXPERIENCED

A WEEK OF CONTINUOUSGROWTH.  IN THE BEGINNING OF THE

WEEK, STOCK PRICESWERE INFLUENCED BY THE RUSSIAN

PLAYERS.  SUBSEQUENTLY, NON-RESIDENTS ENTERED THEMARKET

PUSHING IT UP BY 5.8PERCENT IN TWO DAYS.  LIQUIDITY OF

THE MARKET INCREASEDCOMPARED TO PREVIOUS WEEKS' LEVELS.

TRADE VOLUMESNOTCHED UP TO USD10.5 MILLION ON FRIDAY.

IN THE BEGINNING OFTHE WEEK ENERGOES WERE IN DEMAND.

ON FRIDAY LUKOILSHARES WERE THE MOST POPULAR AMONG THE

--------------------------

TABLE 5: RTS STOCKINDICES

--------------------------

                                               DOLLAR

 DATE    RTS INDEX        PERCENT CHANGE      ADJUSTED

          (R)      NOMINAL (RUB) REAL (USD)

 

 OCT 04  491.04          3.16       2.54     86.65

 OCT O5  5O6.82          3.21       2.O4     88.42

 OCT O6  513.47          1.31       -O.29      88.16

 OCT O7  517.93          0.87       1.34     89.34

 OCT O8  539.69          4.2O       4.44     93.31

 

 -------------------------

 E. INTERNATIONAL RESERVES

 -------------------------

 

 INTERNATIONAL RESERVES OF THE CENTRALBANK AND THE

 FINANCE MINISTRY INCREASED THIS WEEK BYUSD3OO MILLION

AND TOTALED USD11.2BILLION.

 

 -----------------------------------------

 TABLE 6: INTERNATIONAL RESERVES (NOTE 5)

 -----------------------------------------

 

 INTERNATIONAL  BLN USD  PERCENTCHG  PERCENT CHG

 RESERVES                 PREV WK     01.O1.99

 

 10.O1.99         11.2       2.8        -O8.2

 O9.24.99         10.9       O.O        -LO.7

 O9.17.99         LO.9       O.0        -LO.7

 O9.1O.99         LO.9      -1.8        -LO.7

 O9.O3.99         11.1       O.9        -O9.O

 

 ----------------

 F. MONETARY BASE

 ----------------

 

 THE MONETARY BASE DECREASED FOR THETHIRD WEEK IN A ROW

 AND TOTALED R259.0 BILLION.

                .

 --------------------------------

 TABLE 7: MONETARY BASE (NOTE 6)

 --------------------------------

 

 MONETARY   BLN RUBLES    PRCT CHNG FROM       PRCT CHNG FROM

BASE                       PREV. WEEK        PREV. 4 WK AVG

 

10.04.99     259.0           -1.00                -1.8

09.27.99     261.6           -1.13                -1.0

09.20.99     264.6           -0.56                -0.1

09.13.99     266.1           1.45                 0.4

09.06.99     262.3           -0.68                -0.5

 

--------------------------

G. CORRESPONDENTACCOUNTS

--------------------------

 

-------------------------------------------

TABLE 9: BALANCES ONCORRESPONDENT ACCOUNTS

-------------------------------------------

 

       DATE                BALANCE (BLN RUB)

      10.04.99                    59.806

      10.05.99                    58.040

      10-06.99                    56.054

      LO.O7.99                    58.541

      10.08.99                    54.426

 

-----------------------

H. RESERVEREQUIREMENTS

-----------------------

 

BANK RESERVESREQUIREMENTS REMAIN UNCHANGED SINCE JUNE 10, 1999

 

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EXPLANATORY NOTES

------------------

 

1. EXCHANGE RATES:SELT - "SYSTEM OF ELECTRONIC LOT

(CURRENCY)TRADING" - A COMPUTER-BASED OTC-TYPE TRADING

SYSTEM ORGANIZED BYTHE MOSCOW INTERBANK CURRENCY

EXCHANGE(MICEX).  USD-TOD PRICE IS THEPRICE OF THE

DOLLAR WITH THE SAMEDAY DELIVERY.  USD-TOM PRICE IS

THE PRICE OF THE DOLLARWITH DELIVERY ON THE NEXT DAY.

MINIMUM LOT SIZE FOREACH OF THE DOLLAR INSTRUMENTS IS

USD100,000.  AVERAGE PRICE IS QUOTED AS THE WEIGHTED

AVERAGE OF ALL THEBIDS AND OFFERS ENTERED INTO THE

SYSTEM BY VARIOUSBANKS.

 

2. AVERAGE CASHRATES ARE QUOTED AS CALCULATED BY THE

INTER-LINEINFORMATION AGENCY THAT PROCESSES DATA FROM

OVER 500 EXCHANGEPOINTS IN THE CITY OF MOSCOW.

 

3. INTEREST RATES:THE TABLE PROVIDES MOSCOW INTERBANK

BID (MIBID) ANDMOSCOW INTERBANK OFFERED RATE (MIBOR)

B ANNUALIZED AVERAGE BID AND OFFER RATES ONSHORT-TERM

RUBLE LOANS BETWEENCOMMERCIAL BANKS.

 

4. STOCK INDICES:THE RTS INDEX, IS THE ONLY OFFICIAL

INDICATOR OF THERUSSIAN TRADING SYSTEM.  IT IS

CALCULATED EVERY 30MINUTES OF THE RTS TRADE SESSION,

STARTING FROM12:00.  IT COMPRISES 60 SHARES OF35

LEADINGCOMPANIES.  THIS SHARES AREINCLUDED IN SO-

CALLED CATEGORY"A" LISTING.  THE INDEXINDICATES OVER-

THE-COUNTER STOCKPRICES.  THE INDEX REPRESENTS THE

RATIO OF THE TOTALMARKET CAPITALIZATION OF THE SHARES

OF THE COMPANIESSELECTED FOR THE INDEX TO THE TOTAL

MARKETCAPITALIZATION OF THE SAME SHARES AS OF THE

INITIAL DATEMULTIPLIED BY THE INDEX VALUE AS OF THE

INITIAL DATE (31DECEMBER, 1997) USING A BASE OF LOO

BEGINNING SEPTEMBER1, 1995.  THE RUBLE-ADJUSTED INDEX

IS A DERIVATIVE OFTHE MAIN DOLLAR INDEX, USING THE

SAME BASE.

 

5. INTERNATIONALRESERVES OF THE RUSSIAN FEDERATION

REPRESENT THE AMOUNTOF RESERVE ASSETS OF THE BANK OF

RUSSIA AND FINANCEMINISTRY.  THOSE RESERVE ASSETS ARE

COMPRISED OFMONETARY GOLD, SPECIAL DRAWING RIGHTS, THE

RESERVE POSITION INTHE IMF AND OTHER LIQUID FOREIGN

CURRENCYASSETS.  THE LATTER INCLUDE SHORT-TERM

DEPOSITS INNONRESIDENT AND RESIDENT BANKS, BALANCES IN

CURRENT ACCOUNTS, FOREIGNGOVERNMENT SECURITIES, REPO

AGREEMENTS WITHTHESE SECURITIES MADE WITH

NONRESIDENTS, ANDOTHER LIQUID ASSETS (ACCRUED INTEREST

ON THESE ASSETS ISNOT INCLUDED).  MONETARY GOLD IS

EVALUATED AT US0300PER TROY OZ.  FOREIGN CURRENCY

ASSETS ARE CONCERTEDINTO US DOLLARS ON THE BASIS OF

THE CROSS RATES OFFOREIGN CURRENCIES TO THE USO,

CALCULATED USING THEOFFICIAL RATES OF THE RUBLE TO

THESE FOREIGNCURRENCIES, SET BY THE CBR.

 

6. MONETARY BASE(ML) IS COMPRISED OF CASH AND RESERVES

OF COMMERCIAL BANKSON DEPOSIT IN THE CBR.  IT IS THE

BASIC PART OF THEMONEY SUPPLY (M2).

 

7. LOMBARD CREDITS,DISTRIBUTED THROUGH AUCTIONS, ARE

AIMED TO PROVIDE THELIQUIDITY TO THE BANKING SECTOR.

THESE CREDITS AREEXTENDED TO BANKS ON THE BASIS OF

COLLATERAL (T-BILLS,OR MORE RECENTLY, SHARES).