Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (1166)	9/27/2007 12:12:58 PM
From: Elroy Jetson	Read Replies (2) \| Respond to of 71454

Russian liquidity trouble starts to boil . Financial Times -- By Catherine Belton in Moscow -- September 26, 2007 ft.com A senior Russian banker warned on Wednesday of debt defaults as the liquidity squeeze in Russia tightened following the global credit crunch and interbank lending rates climbing to a two-year high. “If debt markets remain closed until the end of the year the situation is going to get very difficult for many banks,” said Oleg Vyugin, chairman of privately owned MDM Bank and former head of Russia’s financial markets regulator. “There could be some defaults. The Russian rouble bond market is not working.” Overnight lending rates in Russia climbed to 10 per cent, the highest since mid-2005, even after the central bank on Wednesday pumped an additional $2.56bn into the banking system via two one-day repo auctions. Traders and bankers said the spike came as companies and banks prepared to make a monthly round of tax payments and primed their accounts to meet central bank requirements in time for end of third quarter financial reports. “Banks are not lending to each other,” said Alexei Yu, a fixed income trader at Aton brokerage. “But it is largely due to internal reasons. Tax payments are falling due at the end of the month and at the end of the quarter, banks must bring their accounts in line with the regulations of the central bank. By the beginning of October, the situation will ease.” The Central Bank was also forced to pump liquidity into the system via repo auctions at the end of August after foreign investors fled Russian money markets amid the flight to quality following the US subprime crisis and tax payments fell due. Russia racked up more than $5bn in net capital outflows in August. Russia’s commodities-dominated stock market has been seen as a safe haven for investors seeking relief from the global financial turmoil as oil and metals prices continue to climb. Russia’s RTS index closed 2 per cent higher on Wednesday, but Russian bond markets have taken a battering after global hedge funds fled and jitters rose over refinancing risks for many Russian companies and banks, which have borrowed heavily on international markets, due to the worldwide credit squeeze. Mr Vyugin said he believed the liquidity squeeze could reach crisis point by the end of the year when many Russian companies and banks are due to make payment on corporate bonds. “This will be a serious test,” he said. “It all depends on the readiness of the central bank.”