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. Last Updated: 07/27/2016

Investors Sell to Take Profits As Concern at Ruble Grows




An afternoon sell-off sparked by International Monetary Fund criticism and growing concerns over the ruble's stability knocked Russian shares out of their torpor Thursday and sent prices plunging by the close.


Traders said the IMF's comments, the fund's harshest on Russia to date, and the Central Bank's announcement that its ruble reserves had dropped by $500 million in one week finally tipped the balance against the market.


"We haven't had much news at all lately and the little we've had hasn't been that good ... I think that a lot of investors decided to take profits now while they still have the chance," one Russian trader said.


After an already soft start, the benchmark RTS1-Interfax share index finished down sharply, shedding 7.37 percent to close at 114.54 on improved volume of $11.83 million.


The broader Reuters Russian Composite was off 7.74 percent at 420.35.


The abrupt drop followed about two weeks in which the market has drifted from 1999 highs set earlier in the month.


The dollar-denominated Moscow Times Index of 50 leading shares fell 8.64 percent to 85.85 on turnover of $13.43 million.


The IMF on Wednesday approved a first $640 million tranche of an 18-month $4.5 billion loan, but the fund complained of poor tax collection and delayed structural reforms.


The fund's first deputy managing director, Stanley Fischer, also blasted Russia for lying about funds transferred offshore through a Central Bank subsidiary. Kirill Maltsev, senior trader at Rye Man & Gor, said the market was mostly edgy about the ruble's stability.


"It's clear that the Central Bank has spent a lot of money to keep the ruble where it is artificially, and that is a big worry for investors," he said.


Economists said the fall in Central Bank reserves was primarily because the bank had heavy foreign debt obligations, but also because of underpinning the ruble.