Russia faces deficit on down ruble
With the price of oil and gas plummeting, Russia's once bulging budget could be heading for a deficit. Megan Williams reports half the country's income is from oil, and production is dropping along with price.
A Russian trader monitors the markets inside a private international investment banking firm in Moscow (Alexey Sazonov/AFP/Getty Images)
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TEXT OF STORY
Bill Radke: Both Russian stock exchanges suspended trading today when prices would not stop falling. The Russian stock market has dropped 70 percent since the credit crisis. The ruble has hit a new low against major currencies. As Megan Williams tells us, Russia is throwing money at the ruble trying to prop it up.
Megan Williams: The Russian central bank is buying up rubles like there's no tomorrow. Everyone else, though, is rushing to cash them in for dollars and euros. And that's driving the ruble down.
The credit crisis pushed Russian industry to sell off assets and beg for bailouts. Now with the price of oil and gas plummeting, Russia's once bulging budget could be heading for a deficit. Half the country's income is from oil, and production is dropping along with price.
Russia has $500 billion in cash reserves. But as the rush away from the ruble picks up, even that may not be enough to keep its currency steady. For Prime Minister Putin, whose power has been propped by high oil prices, that's not good news.
I'm Megan Williams for Marketplace.
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10/24/2008
maybe the silver lining in all this chaos is Russia getting thoroughly stomped down in its bid to reestablish the Soviet Union.
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