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Russia turmoil sparks flight to safety

Wednesday, December 17, 2014 - 02:26

The collapse in Russia's rouble slows for a while, but fears of how the crisis will hit not only Moscow but its trade partners are deepening. As Ciara Lee reports, the repercussions could be felt far and wide.

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Closed for business - some of Moscow's top end luxury goods shops. They'll reopen - but only after they've adjusted their price tags to the rouble's record fall. The currency has plummeted almost 50 percent against the dollar this year, 20 percent this week. On the streets, there were mixed feelings about who is to blame. (SOUNDBITE) (Russian) MOSCOW RESIDENT, ANASTASIYA, SAYING: "It's all because our politicians have started a game which they should not have started. And unfortunately the people are the ones to suffer." (SOUNDBITE) (Russian) MOSCOW RESIDENT, ALEXANDER, SAYING: "People will take their money out and buy everything. But we won't have enough goods, we will be bankrupt. It all shows that the Americans want to topple our president." Russia remains in the grip of low oil prices, looming recession and Western sanctions over the Ukraine crisis. Apple has stopped selling its products on its local website because of the massive currency fluctuations. Many are flocking to electronics shops and car dealerships to try to grab what they can, while they can still afford it. But it's Russia's future that's worrying investors. They're seeking safety, buying core bonds and selling stocks exposed to Russia. And the risk of contagion, particularly to emerging markets, is real, says Admiral Markets UK's Darren Sinden. (SOUNDBITE) (English) DARREN SINDEN, MARKET COMMENTATOR AT ADMIRAL MARKETS UK, SAYING: "I think places like the Philippines could be hit. That's been a market where you've seen strong growth and a lot of hot money has gone into there. And I wonder whether that might be an area where money might be first to leave. And I think really across the board Brazil and South Africa are also not without their own problems and money could be leaving there too." Nick Beecroft from Saxo Bank says Europe is at risk too. (SOUNDBITE) (English) NICK BEECROFT, CHAIRMAN AND SENIOR MARKET ANALYST, SAXO BANK "It will add impetus for QE in Europe. It will just mean that Europe flatlines during 2015 at best in terms of GDP growth." And while the U.S. says sanctions could be lifted if Moscow takes steps to reduce tensions in Ukraine, there are worries it could swing the other way. (SOUNDBITE) (English) NICK BEECROFT, CHAIRMAN AND SENIOR MARKET ANALYST, SAXO BANK "You have the dangers of Putin overreacting, embarking on rather frightening foreign policy initiatives, to deflect the public's attention in Russia from the problems. And then on the other hand maybe you have unrest." The crisis hasn't hit Putin's ratings - yet. He's just been named Russia's 'Man of the Year' for the 15th time.

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Russia turmoil sparks flight to safety

Wednesday, December 17, 2014 - 02:26