'Informal' capital control measures from the Russian government provide some relief for the battered rouble, but more clouds gather on the horizon as S&P warns of a possible Russian downgrade to 'junk'. Hayley Platt reports.
Sleigh bells may be ringing for this Russian Santa as he makes a traditional festive journey to meet his Finnish counterpart. But it's alarm bells that are ringing for the Russian economy. Weaker oil prices, a series of Western sanctions and a falling currency are all hurting. In the past week the Russian government and central bank have stepped in with a raft of measures to support the rouble. Including informal capital controls which will set limits on net foreign exchange assets for state-owned exporters. And in its latest move, the central bank said it would help major Russian companies refinance foreign loans by lending money in hard currencies like dollars and euros. The move revived the rouble - on Tuesday it hit its highest level in two weeks. But it was short-lived. Simon Smith from FX-Pro isn't convinced capital controls are the answer. SOUNDBITE (English) SIMON SMITH, HEAD OF RESEARCH, FXPRO, SAYING: "It creates a lot of problems for companies, a lot of which issue debt in dollars. There's about 30 nearly 40 billion of debt that's maturing in December to February. There's about $150 billion of dollar debt maturing over the coming year. So it's very difficult for an internationalised economy like Russia to put those in on a sustained basis. I think we just have to look and see how the rouble settles in the early part of 2015." Russians are no strangers to currency crises. They saw hyperinflation destroy their savings after the collapse of the Soviet Union. That hasn't happened yet but the Christmas cheer may not last. Credit agency S&P is warning of downgrading Russia to junk status. And earlier this week, a bailout was announced for Trust Bank, one of Russia's mid-sized lenders. It's to receive a $530 million dollars in help to stop it going bust, the first bailout of its kind. But Alastair McCaig of IG says that with the rouble's slide, it may only be the start. SOUNDBITE: Alastair McCaig, IG Market Analyst, saying (English): "We're still down 30 percent against the US dollar since the beginning of October. That means there's going to be continued pressure on the banks and I think there is going to have to be further intervention across the board as the Russian financial oversight needs to keep a pretty close eye on its internal workings." With Russian banks and businesses facing billions of dollars in debt repayments, economists are predicting Russia will slide into recession next year. Bringing with it an unwelcome reminder of the turmoil of the global financial crisis.