Crimea could adopt rouble as its currency, says politician

The Ukrainian region of Crimea could adopt the Russian rouble as its currency and "nationalise" state property as part of plans to join the Russian Federation, a regional official was quoted as saying today.

Interfax news agency cited Rustam Temurgaliyev, Crimea's vice premier, as saying: "All Ukrainian state enterprises will be nationalised and become the property of the Crimean autonomy." Hoping Moscow would let Crimea become part of Russia, he said: "We are ready to introduce the rouble zone."

Earlier Moscow stocks fell, reversing gains from earlier today, and the rouble weakened after reports that the parliament of Ukraine’s Crimea had voted in favour of becoming part of Russia.

The dollar-denominated RTS index traded 1.9 per cent lower at 1,159.6 points, down from the 1,180-1,880-point range where it traded before the news of the unanimous vote.

Russian news agency RIA also reported that Crimea’s vice premier said a referendum on the region’s status would take place on March 16th that would ask whether Crimea should become part of the Russian Federation. A Ukrainian minister said such a referendum would be illegitimate .

The rouble-traded MICEX lost 1.9 per cent on the news to trade at 1,322.2 points. It had earlier traded in positive territory.

Mikhail Kantolinsky, equity trader at Uralsib in Moscow, said that local traders now have two fears. "There is a fear of a war and there is a fear of a potential Ukraine default," Mr Kantolinsky said. "The Crimean authorities are inclined to become part of the Russian Federation - Kiev, of course, will be against, and that means that an armed conflict may be inescapable."

The moves to formally bring the Crimea, which has an ethnic Russian majority and has effectively been seized by Russian forces, under Moscow's rule came as European Union leaders gathered for an emergency summit to seek ways to pressure Russia to back down and accept mediation.

Trading volumes on Moscow indexes are low, said Sergei Filchenkov, head of investors relations at Metropol investment house. "No one can guess what the trend is going to be," Mr Filchenkov said. "There is a sentiment, however, towards buying the most liquid shares which lost in their values."

The rouble was down 0.4 per cent against the dollar at 36.17 and down 0.3 per cent versus the broadly weaker euro at 49.69, increasing its early-day losses.

Analysts at VTB Capital reckon that the rouble is about 8.0-8.5 per cent behind the emerging-market average index so far this year, and Ukraine’s political crisis has accounted for 2.0-3.0 percentage points of that.

Reuters