Russia rebuffs Soros on call for devaluation

MARKETS FELL across the world yesterday after George Soros, the billionaire financier, argued that the Russian rouble ought to be devalued.

Dealers said Mr Soros's comments - made in a letter to the Financial Times - severely damaged market sentiment, already hit earlier by the renewed crisis in the Far East.

The Russian markets plunged by more than 10 per cent - forcing the authorities to suspend trading for 35 minutes - as news of Mr Soros's letter spread. By the end of the day, the market had clawed back some of its losses, closing 101.17 points, down 6.5 per cent.

In his letter to the Financial Times, Mr Soros warned: "The meltdown in Russian financial markets has reached the terminal phase. ... The best solution would be to introduce a currency board [that is, pegging the currency to the dollar or the euro] after a modest devaluation of 15 to 25 per cent."

The Russian authorities refuted all suggestions of a devaluation. Mikhail Zadornov, the Russian finance minister, said: "If we thought that a devaluation was inevitable, we would not be following our current policy. But it is avoidable."

Traders were today expecting another difficult day in Russia after a series of warnings about the country's creditworthiness from leading credit rating agencies. Moody's downgraded its evaluation of the country's debt- paying ability, while Standard & Poor's lowered its long-term counterparty credit ratings on six Russian banks.

The jitters hit almost all the world's stock markets. In the UK, the FTSE 100 closed down 1.1 per cent at 5,399.5, having hit a low of 5,350.3 in early morning trade. In the US the Dow Jones closed down 93.46 points at 8,459.50, erasing an early gain of more than 50 points.

Germany was one of the worst-hit European bourses, with worries about the exposure of German banks to Russia. The electronic Xetra DAX ended 0.59 per cent down at 5,355.03 points, off earlier lows.

Sentiment was hit particularly hard in the emerging markets, where there were rumours of across the board stock selling by US institutions.

The dollar and sterling gained during the day as investors sought "safe haven" currencies. At one point the pound gained more than two pfennigs against the mark, while overnight, the dollar spiked above DM1.80 for the first time in a month.

Mr Soros's assessment of the Russian economic position came against a backdrop of renewed worries in Asia. In Hong Kong, HSBC Holdings, the parent company of the Midland and Hongkong banks, yesterday led the market to its lowest level since April 1993. The blue-chip Hang Seng index tumbled 199 points, a loss of almost 3 per cent, and HSBC alone was responsible for 78 points of the fall after a negative broker's report.

In China, official figures were released estimating that the flooding of the Yangtse River could cost China's economy about $24bn and threaten the country's 8 per cent economic growth target.

Outlook, page 17

Start your day with The Independent, sign up for daily news emails
News
US comedian Bill Mahr
people
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Sport
football
News
Rob Lowe
peopleRob Lowe hits out at Obama's snub of Benjamin Netanyahu
PROMOTED VIDEO
News
Davies (let) says: 'Everybody thought we were having an affair. It was never true!'
people'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Arts and Entertainment
Over their 20 years, the band has built a community of dedicated followers the world over
music
News
Staff assemble outside the old City Road offices in London
mediaThe stories, the writers and the changes over the last quarter of a century at Britain's youngest paper
Life and Style
The Oliver twins, Philip and Andrew, at work creating the 'Dizzy' arcade-adventure games in 1988
techDocumentary looks back at origins of the computer-games industry
Arts and Entertainment
Krall says: 'My hero player-singer is Elton John I used to listen to him as a child, every single record
music
News
Friends for life … some professionals think loneliness is more worrying than obesity
scienceSocial contact is good for our sense of wellbeing - but it's a myth that loneliness kills, say researchers
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
The Wu-Tang Clan will sell only one copy of their album Once Upon A Time In Shaolin
musicWu-Tang Clan and The Sexual Objects offer fans a chance to own only copies of their latest albums
News
i100
Environment
Number so freshwater mussels in Cumbria have plummeted from up to three million in the 20th century to 500,000
environment
Life and Style
Models – and musicians – on the catwalk in Dior Homme for the men’s 2015/16 fashion show in Paris
fashionAt this season's Paris shows, various labels played with the city boys' favourite
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us