Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, October 12, 1994 TAG: 9410120073
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press MOSCOW
DATELINE: LENGTH: Medium
Shock waves from ``Black Tuesday'' spread as money exchanges ran out of dollars and kiosks closed so enterprising merchants could mark up merchandise.
``This country is going down the drain,'' said Yaroslav Sychevsky, who stood in line at a currency exchange.
A free fall of the ruble could endanger Russia's free-market reforms, scare off foreign investors, further squeeze those who rely on imported goods and increase the risks of a recession.
At the same time, a devalued ruble makes Russian exports more competitive and makes it easier for the Central Bank to pay government debts by converting its dollars.
The ruble lost one-fourth of its value against the dollar Tuesday in the worst one-day drop since trading began in 1992. It closed at 3,926 to the dollar at the Moscow Interbank Currency Exchange, a drop of 845.
The Central Bank, which spent billions of dollars to prop up the ruble this year, unleashed the panic when it stopped buying dollars last month. Some called the move an attempt to punish speculators.
Exchanges across Moscow closed Tuesday after selling out of dollars. Some shopkeepers selling imported goods said they might have to double prices to keep up - even though they risked driving away customers.
Everyone looked for someone to blame.
As top government officials convened in hastily called meetings and President Boris Yeltsin met with the speaker of Parliament in the Kremlin, the head of the Central Bank, Viktor Gerashchenko, said the culprits were ``speculators.''
It took the ruble more than a year - from May 1993 to July 1994 - to go from 1,000 to 2,000 against the dollar, but just three months to sink to 3,000. In the past two days of trading, the ruble has fallen by more than 1,000 to the dollar.
by CNB