Russia Crisis Hits Pimco Fund, Wipes Out Options [View all]
Source: Bloomberg
After the single worst day in Russia’s nine-month-old financial crisis, the fallout is spreading across global markets.
Pacific Investment Management Co. (PEBIX) is facing mounting losses on its Russian bond holdings; almost every bullish ruble option contract registered in the U.S. has been made worthless; and foreign-exchange brokers in New York and London told clients they’re no longer taking ruble trades. Sergey Shvetsov, a first deputy central bank governor, expressed astonishment at the scope of the collapse during a conference in Moscow.
“We couldn’t imagine what’s happening in our worst nightmare even a year ago,” Shvetsov, who oversees financial markets at Bank of Russia, said yesterday. He said the surprise interest-rate increase in the middle of the night, a 6.5 percentage-point move that failed to stem the run on the ruble yesterday, was a choice between a “very bad” option and a “very, very bad” option.
The ruble sank beyond 80 a dollar, a record low, as panic swept across Moscow’s financial markets before it rebounded after Economy Minister Alexei Ulyukayev denied speculation the government would impose restrictions to stop Russians from converting cash into dollars. The currency ended the day at 67.9, down 5.4 percent on the day, while bonds and stocks also tumbled. The ruble fell 0.8 percent to 68.0150 at 1:36 p.m. in Moscow, as the Micex Index of stocks dropped 0.6 percent.
Read more: http://www.bloomberg.com/news/2014-12-16/russia-crisis-hits-pimco-fund-wipes-out-options-as-ruble-sinks.html?hootPostID=42225f86d7c6a76fce583c8848acb022
Ouch that stings...
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