Putin rushes to deny rouble redenomination talk

By Gleb Bryanski

MOSCOW, Feb 14 (Reuters) - Russian President Vladimir Putin on Thursday denied a rumour that the authorities were about to redenominate the rouble, but he was unusually shy about economic policies during his annual news conference.

Russian media reported that some people have rushed to place cash on bank deposits and bought real estate in recent weeks as speculation about a redenomination spread in a country where painful memories of the crises of the 1900s are still fresh.

"Do you want me to eat earth from a flower pot? Make an oath in blood?" Putin said when asked for the second time month if he could give a guarantee there would be no banknote swap.

A redenomination would remove one or more zeroes off rouble banknotes, though one dollar buys only about 24.6 roubles <RUB=>.

Putin is due to step down in May after a March presidential election which his chosen successor Dmitry Medvedev is expected to win. Medvedev is due to make a keynote speech on economy in eastern Siberian city of Krasnoyarsk on Friday.

Although Russia enjoys record economic growth and has the world's third largest gold and forex reserves, ordinary Russians still have dark memories of the chaotic 1990s.

Millions lost their savings in the crises of the 1990s and still confuse redenomination with devaluation and even default.

"I remember that one week before the 1991 banknote swap Prime Minister Valentin Pavlov dismissed it on television as a rumour," said a "Russian denomination" chatroom posting, referring to the last Soviet cabinet's drastic move which wiped out millions of people's savings. Russia's gross domestic product grew by 8.1 percent in 2007, the budget surplus rose to 5.5 percent of GDP and Putin said the country, due to its strong macroeconomic fundamentals, had no reason to embark on a new costly banknote swap.