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from Breakingviews:

Rouble hard to defend against Putin’s attacks

By Pierre Briançon

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Vladimir Putin isn’t waiting for the European Union’s sanctions on Russia and is already inflicting serious damage on the nation’s economy. The Russian president’s move on Crimea has sent Moscow stock markets down by 18 percent since the beginning of March, and the rouble has fallen almost 2 percent in the same period, and 12 percent since January, even with the Central Bank of Russia dipping into its $500 billion-odd worth of reserves to defend the currency. Yields on 10-year Russian government bonds now stand at 9.42 percent, up 1 percentage point since the events in Crimea.

Foreign investors are getting out in a hurry, because the Ukrainian crisis has made them realise that the Russian president is unpredictable. Economists are rushing to lower their GDP estimates. Expectations have moved from slow to anaemic growth. Citi just cut its forecast from 2.6 percent to 1 percent for this year. Putin’s response showed the extent of his economic understanding. A few days ago he summoned the finance minister and the central bank president to complain that such forecasts of declining growth were “unacceptable.”

Elvira Nabiullina, the central bank’s governor, may have felt uncomfortable at the president’s ire. She heads what was considered one of the country’s last independent, serious public organisations, which hiked interest rates by 1.5 percent to 7 percent on March 3 to stem a rouble freefall. The rate increase will slow growth further, even though it squares with the central bank’s concern about inflation: Russia was planning to move next year to an inflation-targeting monetary policy with a floating currency.

from MacroScope:

China at a crossroads on yuan internationalization project

As China marks the third anniversary of the first ever bond sale by a foreign company denominated in renminbi, questions are rife on what lies next for the offshore yuan market.

Since hamburger chain McDonalds sold $29 million of bonds on a summer evening just over three years ago, China’s yuan internationalization project has notched up impressive milestones.More than 12 percent of China’s trade is now denominated in yuan from less than 1 percent three years ago, Hong Kong – the vanguard of the offshore yuan movement – has more than one trillion yuan of assets in bank deposits and bonds and central banks from Nigeria to Australia have added a slice of yuan to their foreign exchange reserves.

from Breakingviews:

QE-lenient world gives Vietnam financial pardon

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Wayne Arnold

Investors can’t stay mad at Vietnam. Even after a downgrade last month by rating agency Moody’s, they’re willing to lend Hanoi dollars for less. Rising exports have helped restore reserves and avert a potential balance of payments crisis, while top officials have apologised for economic mismanagement. In a world awash with cash, however, investors are all too eager to forgive and forget.

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