LONDON (AP) — Standard & Poor's rating agency on Monday downgraded Russia's credit grade by one notch to junk status, citing a weakened economic outlook.

The agency dropped the rating to BB+ from BBB- as it sees the country's financial buffers at risk amid a slide in the country's currency and weakening revenue from oil exports.

"In our view, the Russian Federation's monetary policy flexibility has weakened, as have its economic growth prospects," it said.

Russia's economy has been hit hard by the double impact of weaker prices for its energy exports as well as Western sanctions.

The Russian currency tumbled on the downgrade, dropping some 7 percent to about 68.5 rubles to the dollar.

Standard & Poor's said that Russia's financial system is weakening, limiting room for maneuver for Russia's Central Bank. It said the bank "faces increasingly difficult monetary policy decisions," while also trying to preserve incentives for growth.

The Russian economy is expected to contract by 4 to 5 percent this year for the first time since President Vladimir Putin took the helm in 2000.

Capital outflows, which averaged $57 billion annually during 2009 to 2013, soared to $152 billion last year. "Stresses could mount for Russian corporations and banks that have foreign currency debt service requirements without a concomitant foreign currency revenue stream," the rating agency said.

Russia's Finance Minister Anton Siluanov sought to play down the anticipated move, saying it reflected the rating agency's "excessive pessimism." He emphasized the Russian economy's strong fundamentals, such as high level of hard currency reserves, trade surplus and low level of state debt.

"These undoubtedly are Russia's advantages in the current macroeconomic conditions," Siluanov said in comments carried by Russian news agencies. "There is no reason to overdramatize the situation."

Prior to the announcement, Putin had a meeting with Cabinet members on anti-crisis measures. He said the government should focus on cutting spending, keeping inflation under control and making sure that the country doesn't waste its hard currency reserves.

:lol: seriously ardtho stop just stop. You're becoming a wamakie with your idiotic posts

whats wrong with being gay??


this is Extra Time, where idiotic are the norm

go read "List 10 men you would bang if you were gay." topic

Edited by adrtho: 27/1/2015 09:00:21 PM

How did you turn this into russian anti gay legistlegislation? Also s&p were the only agency to downgrade america to a - . If other angencies follow suit in downgrading russia then you have domething to talk about

Wtf are you on about this time??

night club i once owed , and how it was a very big supporter of LGBT

the decision to supporter LGBT , was taken by my night club staff and manger...

and your point?? If you have one .

How does standard & poor downgrading the rouble connect to russrussia's anti gay legislation? ? Seriously thats a very long bow

Credit-default swaps on Russian government bonds rose seven basis points to 598, according to data provider CMA. That’s near the highest level since 2009 and signals a 34 percent probability of default within five years, the data show

Russia won't default lol. Going to make a shit load on forex doe.

This is great. Im sick of seeing Russians everywhere when I go on holiday these days.

I'd say avoid Thailand then, but there's a million Swedes there anyway :lol:

Why Russia’s Economy Will Not Collapse

GENEVA – The rapid depreciation of the ruble, despite a dramatic – and seemingly desperate – late-night interest-rate hike by the Central Bank of Russia (CBR) last month, has raised the specter of Russia’s economic meltdown in 1998. Indeed, the West has sought to animate that specter in its ongoing confrontation with Russian President Vladimir Putin. But, though Russia’s economy is undoubtedly in trouble, a full-blown collapse is unlikely.
Oil and gas account for more than 60% of Russia’s exports; other primary commodities make up much of the rest. Given this, the recent sharp decline in world oil prices obviously represents a major shock – large enough, when combined with the effect of increasingly strict Western sanctions – to provoke a sizeable recession. To make matters worse, commodity prices are expected to remain low for some time. In that case, the income loss would become much more than a temporary setback.

But Russia is no economic basket-case-in-waiting – at least not yet. The situation today is very different from that in 1998, when Russia was running twin fiscal and current-account deficits. Russia needed to borrow, and it was borrowing heavily in foreign currency. This meant that as the ruble depreciated, Russia’s debts rose. Eventually, default became inevitable.
By contrast, in recent years, Russia has enjoyed a sizeable budget surplus, and public debt is below 20% of GDP. It is true that income from oil and gas, which represents the bulk of government revenues, has been halved when measured in dollars. But the Russian currency has fallen by about the same percentage, meaning that the government’s income in rubles remains approximately unchanged.
Similarly, Russia’s current-account balance has been mostly in surplus in recent years. Gross public and private external debt is below 40% of GDP, and much of it is denominated in rubles. The sharp fall in export income is rapidly changing the situation, but Russia is starting from a comfortable position. To panic would be premature.
The ruble’s free fall has been driven mainly by capital outflows. Russia’s famous oligarchs have already stashed most of their wealth abroad, but they retain significant savings at home. As the economic and political situation deteriorates, they are most likely pulling more money out. Small savers have every reason to switch into foreign currency as well.
This has put the CBR in a challenging position. The ruble’s depreciation is bound to fuel inflation, already around 11% and far above the CBR’s 5% target. In that context, raising the interest rate sharply makes sense, and officials may be hoping that the hike will stem capital outflows – despite the risk that the decision, if interpreted as being aimed at defending the currency, could have the opposite effect.
The trouble is that the higher interest rates are bound to deepen Russia’s economic downturn, making the CBR an easy scapegoat. Never mind that the central bank is not responsible for Russia’s troubles – the run on the ruble, the recession, and the flare-up of inflation – and that using interest rates to prevent capital outflows always fails. Embattled politicians can be counted on to point the finger.
The threat to Putin is clear. He risks the fate of his predecessor, Boris Yeltsin, who presided during a period of unusually low oil prices. Until now, Putin has been lucky, coming to power just as oil prices started to rise. Most Russian citizens credit him with two decades of rising living standards, following decades of decline.
Putin’s decision not to implement the unpopular reforms that would have created a strong non-oil export sector may have been bad for the economy’s long-term health, but it has allowed him to maintain widespread public support. His economic good fortune, combined with his readiness to stand up to the West, has created a misguided impression in Russia that the country is, once again, a world power.
Many in the United States and Europe believe that ratcheting up economic pressure on Russia will help drive Putin out. This is an enormously dangerous gamble. As Russian living standards decline, Putin’s only viable strategy to remain in power will be an aggressive international posture. Foreign military adventures, after all, are most appealing when the domestic front is on fire.
None of this means that the West should bow and forsake its principles. But it does mean that the time has come for a diplomatic approach that does not depend on the prospect of Russia’s economic collapse.

One-Fifth Of Russian Banks Could Collapse In 2015

The Center for Macroeconomic Analysis and Short-Term Forecasting estimates that as many as 200 banks face collapse this year as a combination of bad loans and falls in the value of the ruble punish small- and mid-sized firms, Russian business daily Vedomosti reports.

For the country's banking sector the problems are even more severe. They hold a total $192 billion of external debt, around 70% of which is dollar-denominated, and that bill is getting ever larger as the ruble continues to slide against major currencies. Over the past year the ruble has fallen almost 50% against the dollar.

adrtho has a long long long long longgggggggggggggggggggg way to go before he reaches Polemides levels of agendas :lol:

-PB