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    Bank of Japan Excludes Possibility of Repeat of Russian 1998 Crisis

    Mikhail Kutuzov
    Business
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    A sharp decline in oil prices could damage Russia's economy, but Russian oil and gas company are not on the verge of default because of debt, Bank of Japan Governor Haruhiko Kuroda believes.

    MOSCOW, December 19 (Sputnik) – Russia will not descend into a financial crisis similar to the one observed in 1998, Bank of Japan (BOJ) Governor Haruhiko Kuroda said Friday.

    "I don't think there will be a repeat of 1998's crisis," The Wall Street Journal cited Kuroda as saying.

    Speaking at a press conference following a two-day BOJ policy meeting, Kuroda said that a sharp drop in oil prices could damage Russia's economy, but he has not heard about Russian oil and gas companies being on the verge of default because of debt.

    Answering a question about the impact of Russia's turmoil on the Japanese economy, Kuroda said that direct effect through investment and trade is likely to be limited but an indirect impact through markets is cause for concern.

    On December 15, dubbed "black Monday", the ruble nosedived by over 20 percent, the worst collapse of the ruble since the 1998 Russian financial crisis.

    As a responsive measure, Russia's Central Bank increased its key interest rate from 10.5 percent to 17 percent in an attempt to limit substantially increased ruble depreciation and inflation risks.

    Following the Central Bank's measures, on Tuesday Russian ruble saw another major slump but strengthened its position against US dollar by the evening. As of Friday, the ruble is gaining strength against the dollar.

    Russia is currently experiencing an economic slowdown and a rapid depreciation of the ruble amid a dramatic decline in oil prices, which accounts for a significant part of the Russian budget's revenues.

    A number of senior Russian officials say another reason for the economic downturn is Western sanctions imposed against Moscow over its alleged involvement in the Ukrainian crisis.

    On Thursday, Russian President Vladimir Putin said during a televised news conference that the country's economy would eventually recover from the downturn over the next few years. The Russian leader suggested that the situation may begin to improve in the first quarter of 2015.

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    ruble, financial crisis, Bank of Japan, Russia
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