RUBLE STRENGTHENS AGAIN, BUT HARD-CURRENCY RESERVES MELT AWAY.

While the Russian currency continues to strengthen in relation to the U.S. dollar, many observers remain skeptical that it is anything more than a temporary respite. The ruble, which dropped to 23.06 on Monday but strengthened to 22.58 on Tuesday, strengthened further on Wednesday, hitting 21.80 to the dollar. Yevgeny Yasin, Russia’s former economics minister, warned, however, that the Central Bank’s gold and hard currency reserves are declining dangerously. “The Central Bank’s reserves are melting away and won’t last for long,” Russian news agencies quoted Yasin as saying. Russia’s reserves had reportedly dropped to US$12.22 by the end of last year, while the country’s money supply reportedly grew 4.2 percent during the week ending January 5.

While Russian officials have tried to use the ruble’s sudden strength as proof that the government is on the right course and that it will hold to the parameters laid out in its draft budget, other indicators and analysis suggest there has been no fundamental break with the negative trends triggered by last August’s financial meltdown. An Economist Intelligence Unit report, released on January 12, stated, first, that the outlook for the world’s transition economies next year will “be dominated by the continuing collapse in Russian output” and, second, that “renewed inflation and declining output” are “inescapable” for Russia this year (Russian agencies, January 12). Germany’s Federal Statistic Office, meanwhile, reported yesterday that German exports to Russia fell almost 27 percent in the third quarter of 1998, after rising 43 percent and 19 percent in the first and second quarters of the year, respectively (Reuters, January 13). And, yesterday–in a sign that Russia remains in dire straits when it comes to revenues–the government imposed a five-percent tax on natural gas, copper, nickel, coal and other commodities exported to countries outside the Commonwealth of Independent States. The Kremlin hopes that the measure will help it raise more than US$1 billion (Russian agencies, January 13).

LEBED WARNS OF APOCALYPSE NOW IN NORTH CAUCASUS.