Russia's Economy In Freefall!

Russia’s economy is in free fall. The stock exchanges have been closed two days. The government is hoping to turn the economy around.

FT: President Dmitry Medvedev of Russia pledged $20bn (€14bn, £11bn) on Thursday to shore up the nation’s stock markets as investors were braced for the two main stock exchanges to re-open on Friday after the worst declines since the August 1998 crash.

Mr Medvedev’s pledge came as the finance ministry rolled out an crisis plan aimed at boosting liquidity in the banking system, which would double the amount of budget funds placed in short-term deposits at the three main state-controlled banks to a total of Rbs1,500bn ($59.1bn).

The government also said it would slash oil export taxes by a quarter, a move that would raise liquidity across the banking system by boosting the cash balances of oil companies that have been squeezed by tax rates set at the high oil price levels of a few months ago. Ruben Vardanyan, president of Troika Dialog, one of Moscow’s largest investment banks, said: “I hope this [plan] will stabilise the situation. Some very serious steps have been taken that should act not just for the short term but over a longer horizon too.”

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