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   World Bank Urges Russia to End Its Ruble Policy

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News Date

12/21/2008 8:15 pm

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Wall Street Journal

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News

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Entered 12/21/2008, Updated 12/21/2008

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MOSCOW -- The World Bank called on Russia to abandon the ruble's managed exchange-rate policy in order to moderate capital outflow, which is set to reach at least $100 billion this year, and safeguard the country's massive monetary reserves. The recommendation, the World Bank's firmest on the subject yet, capped a week of economic data making it seem more likely Russia will fall from robust growth to recession. Zeljko Bogetic, the World Bank's lead economist for Russia, said that an average price of $30 a barrel of oil over the next two years would be ruinous for an economy that relies hugely on revenue from crude exports. Shrinking revenue, which has been falling in lockstep with the more than 70% drop in oil prices since summer, has put enormous downward pressure on the ruble, which economists consider a commodity currency. This, in turn has led Moscow to try to keep the currency from sliding and avoid widespread fears that another 1998 crash is looming.


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