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Drumbeat: Ad Buzzaar
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Saturday, August 15, 1998
George Soros urges Russia to devalue rouble
REUTERS
LONDON, Aug 14: International financier George Soros called for a devaluation of the Russian rouble and suggested the introduction of a currency pegged to the dollar or euro. In a letter to the Financial Times, Soros said Russia's financial markets had "reached a terminal phase".He conceded the currency board he was proposing for Russia was "too rigid", but said that "in the present circumstances, it is the most efficient way to stabilise the situation".The billionaire philanthropist, who made a fortune betting against the European exchange rate mechanism in 1992, said Russia would need $50 billion of reserves to back a currency board, whereby it would be committed to exchanging roubles for dollars or euros at a set rate.Soros said this rate should be 15 to 25 per cent below the current exchange rate, to reflect the impact of the collapse in the oil price. The Financial Times said Russia had more than $17 billion of reserves, with the International Monetary Fund and World Bank having agreed to provide afurther $17 billion of assistance. Soros said the Group of Seven leading industrial nations should provide a further $15 billion to shore up confidence in the new regime, adding any delay would be disastrous. Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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