HERES WHY26 Sep 2011 22:00
Oil Price Falling
The world’s largest energy exporter saw the price of its main export, Urals crude oil, fall more than 7 percent last week to $104.93 a barrel, $10 below the level required to balance the budget.
Speculation over who would run for president pushed Russian equities evaluations to the lowest in emerging markets. The Micex index slipped 12 percent last week, dropping valuations on the measure’s 30 shares to an average 4.7 times of member companies estimated earnings, the cheapest among 23 emerging markets tracked by Bloomberg.
The ruble has slumped 10 percent against the dollar in September and is poised for its worst month since January 2009, according to Micex prices compiled by Bloomberg. The currency was unchanged at 32.0475 per dollar late on Sept. 23 in Moscow, the lowest level since Aug. 17.
Increased Order
Putin’s first two terms as president were marked by order and increased state ownership of the country’s biggest companies. Buoyed by a booming global economy, Russia averaged 7 percent growth a year during Putin’s 2000-2008 presidency.
Mikhail Kasyanov, a prime minister under Putin until he was fired in 2004 and now an opposition figure, predicts Russia may see its reserves dry up and record a budget deficit of as much as 5 percent of economic output if crude prices fall by a third from their current levels. Putin said on Sept. 21 that there will be no budget shortfall this year.
“If the price of oil falls to $70, that means the ruble will sink, the price of food and medicine will go up 30 percent as most are imported, and there will be a wave of social discontent,” Kasyanov said by phone.
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