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Many economists in Russia say a ruble devaluation similar
Many economists in Russia say a ruble devaluation similar to the 1998 collapse is very likely, but authorities reject their analysis, saying the country has enough resources to prevent the scenario.

Analysts said last week alone the Central Bank spent some $13 billion from the gold and foreign currency reserves to support the ruble, and the reserves have declined $80 billion since July.

An ING bank report cited by the Vremya Novostei daily on Monday said the Central Bank would be able to contain the ruble devaluation throughout 2008, with the reserves currently standing at about $516 billion.

ING said a ruble devaluation was possible if oil prices fell below $60 a barrel in 2009 forcing the Central Bank to review its policy.

Light, sweet crude was down $2.24 to $61.91 a barrel on Monday. Oil prices have fallen more than 57% from a record $147.3 in July. OPEC moved last week to cut production in a bid to shore up prices.

First Deputy Prime Minister Igor Shuvalov said at the weekend that the Central Bank was capable of preventing sharp ruble fluctuations. He said the global credit crisis would not lead to an economic recession and financial collapse in Russia.

The government daily Rossiiskaya Gazeta on Monday quoted Shuvalov as saying that the global financial crisis had been expected, and Russian banks would have been more affected if it broke out several years later, when the domestic credit system was more developed.

Echoing the assessment, experts cited by Komsomolskaya Pravda said individuals, who have rushed to buy dollars amid fears of a wider recession, were partly to blame for the recent appreciation of the U.S. currency.

Alexei Mamontov, head of the Moscow International Currency Association, said the current dollar rush would take several weeks to subside, the paper reported.

Other experts said, however, that a devaluation was inevitable, drawing parallels to the situation ahead of the 1998 crisis. Economists cited by the popular daily Nezavisimaya Gazeta said the country would face either a gradual or a sharp devaluation, the former requiring considerable spending from the gold and currency reserves.

The ruble had been gaining for several years on the back of high oil and gas prices and reached its highest level of around 23 to the dollar in July. The official ruble-dollar rate for Monday was set at 27.35 rubles. Some street currency exchanges are selling dollars for more than 28 rubles.

Russia's both exchanges closed early on Friday after dramatic declines and said they would not reopen until Tuesday. The MICEX was 14.2% down, and the RTS dropped 13.7%. Trading on both exchanges was halted for an hour earlier on Friday over sharp falls. The dollar-denominated RTS is down 77% and MICEX almost 74% since their peaks in May.

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