After the collapse of the oil price and the Russian ruble last week, Russia may be seeing some light at the end of the tunnel. According to a report by Bloomberg this morning, two Chinese ministers have offered Russia support as President Vladimir Putin tries to resuscitate the ruble without depleting the Russian central bank's currency reserves.
Bloomberg cites comments made by Chinese foreign minister Wang Yi in Bangkok in a December 20 report by Hong Kong-based Phoenix TV to the effect that China will provide help if needed and is confident Russia can overcome its economic difficulties, while Chinese commerce minister Gao Hucheng is reported as saying that a currency swap between China and Russia and making increased use of yuan for bilateral trade would have the greatest impact in aiding Russia
In response, the ruble has strengthened against the US dollar, and the oil price is also up about 1%. Russia is the world's biggest energy exporter, and the ruble has collapsed by some 59% this year because of the drop in the price of oil, which comes on top of US and European sanctions because of Russia's invasion of the Crimea.
Bloomberg mentions that China and Russia signed a three-year currency-swap line of 150 billion yuan ($24 billion) in October, an agreement that can be expanded with the consent of both parties.
Bloomberg says that a Chinese commerce ministry news official, who asked not to be named as part of the rules, said his department declined to comment on the Phoenix TV report, and that a faxed question to the Chinese central bank went unanswered. Bloomberg quotes Jin Canrong, Associate Dean of the School of International Studies at Renmin University in Beijing, as saying, "Many Chinese people still view Russia as the big brother, and the two countries are strategically important to each other. For the sake of national interests, China should deepen cooperation with Russia when such cooperation is in need.”
On the Israeli market, stocks and bonds of Israeli companies with exposure to the Russian real estate market have recovered some of their recent losses. The share price of Africa-Israel Investments Ltd. (TASE:AFIL), controlled by Lev Leviev, is currently up 3.65%, while that of Jerusalem Economic Corporation, controlled by Eliezer Fishman, is up 6.42%.
Published by Globes [online], Israel business news - www.globes-online.com - on December 22, 2014
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