B. Loss of Confidence

C. Natural Step

D. Ruble Crisis

E. Cross-Border

F. Ruble Gains

Use of English

26. For questions 1–15, read the text below and think of the word which best fits each space. Use only one word in each space.

Russia May Scrap Ruble for New Customs Union Currency

March 5 (Bloomberg) -- Russia may scrap the ruble and introduce a common currency with Belarus and Kazakhstan (1) ……… the nations broaden their alliance and seek to reduce their dependence (2) ……… the dollar, a first deputy prime minister said.

“I won’t exclude a transition to a common currency union with these countries in the future,” Igor Shuvalov said at a Moscow conference today. The currency alliance will be modeled (3) ……… the European Union, which created a new unit (4) ……… than using an existing one, he said, (5) ……… no talks have been held.

Russia and two former Soviet neighbors plan to create a single economic market by 2012 after their customs union (6) ……… effect on Jan. 1. A new currency is “the next logical step” (7) ……… economic union, Shuvalov said (8) ……… giving a timeframe.

Russia has sought to promote regional currencies in trade and diversify (9) ……… reserves, the world’s third-largest stockpile, to reduce risks (10) ......... by the dominance of the dollar. President Dmitry Medvedev last year questioned the dollar’s future as a reserve currency and called (11) ……… a mix of regional currencies to make the world economy (12) ……… stable. He said a new supranational currency could reduce vulnerability (13) ……… movements in the dollar.

The world’s biggest energy supplier (14) ……… eventually begin selling oil (15) ……… rubles, Finance Minister Alexei Kudrin said on Jan. 22.

1.

The ruble strengthened 0.2 percent to 34.6142, a 14-month high, against the central bank’s target euro-dollar basket in today’s trading. The Russian currency gained 0.6 percent to 40.4529 per euro,the strongest since Dec. 25, 2008, while slipping 0.3 percent to 29.8394 against the dollar.

The central bank steers the ruble against the basket to limit fluctuations that hurt exporters and used a floating corridor of 35 to 38 against the basket between August and February for its daily foreign-currency moves.

Investors have pared bets that the ruble will weaken, with non-deliverable forwards showing the currency at 30.10 per dollar in three months compared with an NDF of 30.21 on March 4. The contracts are a guide to expectations of currency movements as they allow foreign investors and companies to fix the exchange rate at a particular level in the future.

2.

The three countries will need gradually to increase trade in national currencies before switching to a common exchange unit, Andrei Kostin, head of VTB Group, Russia’s second-largest lender, said at today’s conference to mark Russia assuming the rotating chairmanship of the Commonwealth of Independent States.

“This will be a natural step to take since the three countries don’t need visas and share the same language --capital movement would remain the only factor in the way of economic integration,” Alexei Moisseev, senior economist at Renaissance Capital in Moscow. “Forming a new currency would take at least five years, assuming they go ahead with it.”

VEB, Russia’s state development bank, has begun settling accounts with Ukrainian companies in Russian rubles, Chief Executive Officer Vladimir Dmitriev said at the conference.

3.

Russia has agreements that allow the use of the ruble and yuan in cross-border trade, First Deputy Central Bank Chairman Alexei Ulyukayev said in October. It is also in talks with India and Brazil to use their currencies in trade, he said.

Belarus and China agreed in March 2009 to a $2.9 billion currency swap to facilitate trade between the two countries. The three-year accord is worth 20 billion yuan, or 8 trillion Belarusian rubles, and may be prolonged by mutual consent.

Russia’s central bank isn’t considering similar currency swaps because the yuan is too “insular” for swaps, Sergei Shvetsov, head of financial operations at Bank Rossii, said in an interview on Dec. 10.

The world will probably have “five or six currency unions” similar to the euro region over the next decade to challenge the dollar and help facilitate trade and reduce exchange-rate volatility, Arkady Dvorkovich, President Dmitry Medvedev’s senior economic adviser, said in a speech last year.

Four Gulf states are working toward a single currency which may see them step away from a dollar peg. The board of the monetary council that will determine the new system is made up of the central bank governors of Kuwait, Saudi Arabia, Bahrain and Qatar. Oman and the United Arab Emirates have opted out.

4.

For the ruble to gain wider acceptance, Russia will have to sell more sovereign domestic debt and more of its main exports, oil and natural gas, in its own currency, Dvorkovich said.

The central bank has started buying Canadian dollars and securities, Ulyukayev said in January. Russia’s reserves were previously made up of 47 percent U.S. dollars, 41 percent euros, 10 percent pounds and 2 percent yen. Bank Rossii is also discussing the possibility of buying Australian dollars, Chairman Sergei Ignatiev said

Energy, including oil and natural gas, last month accounted for 64 percent of Russia’s exports to the CIS, a grouping of post-Soviet nations, the Federal Customs Service said in a report today. Machinery and other manufactured equipment made up 21.5 percent of CIS imports into Russia, while metals accounted for 19.8 percent, according to the report.

To contact the reporters on this story: Maria Levitov in Moscow at mlevitov@bloomberg.net; Paul Abelsky in Moscow at pabelsky@bloomberg.net.

Date: 2015-12-24; view: 594