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Rare Ruble Rise Seen As Possible Sign Of Economic Stability

May 15, 1995

MOSCOW (AP) _ It has slid, fallen, dipped and collapsed since the demise of the Soviet Union. The ruble isn’t even the currency of choice for consumers in Russia, where _ shhh _ many prices are set in dollars.

But since late April, the long-reeling ruble has actually risen on foreign exchange markets, prompting a surge in demand for the maligned currency. On Monday, it recorded its biggest one-day jump against the dollar since last fall.

Fleeting or not, the ruble recovery has lent credibility to the government’s economic reforms and provided hope of longer-term stability.

``I’m afraid this will not last for a long period,″ Igor Doronin, an analyst at the Moscow Interbank Currency Exchange, said after Monday’s trading session. ``But for now it is a positive sign for reforms.″

It took 5,056 to buy a dollar Monday, stronger than its 5,088-to-the-dollar exchange rate Friday. The ruble has gained 1.5 percent in value this month.

The gain may seem minuscule for those who remember the days when a ruble bought a loaf of bread _ it now costs 1,200 or more _ or recall last Oct. 11 when the currency lost 21 percent in one day.

But compared with a 65 percent plunge in value for 1994, these are heady times indeed for government economists.

``This is the result of the anti-inflation policy we’ve been conducting,″ Natalya Khomenko, a spokeswoman at the Central Bank of Russia, said last week.

Demand for rubles is high even on the street. A spot check of four currency exchange windows in Moscow on Monday found handwritten ``No Rubles″ signs posted at all of them.

But the dollar still rules in Russia, despite the U.S. currency’s own recent bout of weakness against other important currencies like the German mark and Japanese yen.

``I have no confidence in the ruble,″ said a customer waiting at a Moscow exchange window to trade stacks of 50,000-ruble notes for dollars. The man in a blue track suit, who identified himself only as a businessman named Oleg, said of the ruble: ``I think it will fall again soon.″

Lack of faith in the ruble has hurt Russia’s economy. The government says Russians possess as much as $20 billion in savings kept squirreled away in homes rather than in banks, because of distrust in both the currency and the banks.

When the government tried to boost the ruble’s credibility last year, banning purchases and then formal pricing in dollars, many stores dodged it by replacing the dollar sign with ``units,″ and keeping their dollar-based system intact.

This year, with monthly inflation dropping to 8.5 percent for April, investors are more interested in rubles again because the currency’s purchasing power has been relatively stable.

Analysts and economists say the strength is partly due to moves by the Central Bank, including a sharp tightening of banks’ currency reserve requirements and high yields on government treasury bills. This has reduced the supply of rubles in circulation and raised demand for them because government treasury bills must be purchased with the currency.

But pressures are expected to increase on the government to loosen its monetary policy, especially from export-oriented industries such as oil and gas producers who lose money when the ruble rises. Predictions on how long the upward trend will last range from a few days to a few months.

Sergei Pavlenko, director of the government’s Center for Economic Reform, said the earlier-than-expected stabilization of the ruble could fuel inflation if people sell their hard-currency savings for rubles and spend the money.

But Russians, inured to crisis and sudden change, aren’t emptying out their piggy banks yet.

Marina Obroskina, a 30-year-old businesswoman, said the ruble won’t be reliable until inflation dips below 2 percent a month and banks make it more worthwhile to bring all that elusive money back.

Asked when that might be, she said with a laugh: ``Maybe by the end of the century.″

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