Russia, Ukraine sign deal to get gas supplies moving

Russia says gas supplies to Ukraine will resume after it pays off the first debt installment next week.

Alexei Miller, the chief of Russia’s state-controlled Gazprom natural gas giant, made the statement Friday hours after Russia, Ukraine and the European Union thrashed out a $4.6 billion deal that will guarantee Russian gas supplies to Ukraine and farther on to the EU.

The deal eased fears that Europe will end up shivering this winter as occurred during a 2008 gas dispute when Ukraine siphoned gas intended for Europe and Russia turned off the taps in response.

Moscow cut off gas supplies to Ukraine in June over unpaid debts, a move that followed the ouster of Ukraine’s Russia-friendly leader and the Kremlin’s annexation of Crimea.

Russia raises interest rate to help shore up ruble

Russia’s central bank Friday raised its main interest rate more than anticipated in its latest attempt to shore up the plummeting national currency.

The bank lifted its main rate by 1.5 percentage points to 9.5 percent – a sharp increase that far surpassed market expectations. The move comes in the wake of the ruble’s fall this week to an all-time low of 43.4 rubles per dollar. Since then, the currency has recovered somewhat to 42 rubles but it remains volatile.

The ruble strengthened after the bank’s move, but soon sank again, reflecting the fundamental factors that have driven it down over the past few months – falling oil prices and continuing tensions over Ukraine.

U.S. and European sanctions in response to the Kremlin’s annexation of Crimea and support for a pro-Russian insurgency in eastern Ukraine have hurt the Russian economy that was already teetering on the brink of recession. Investor confidence has been eroded and capital flight has accelerated.


Central bank to intensify bond purchasing program

Japan’s central bank surprised the financial world and pleased investors Friday by intensifying its purchases of government bonds and other assets to try to revive an anemic economy.

The Bank of Japan’s move to pump trillions more yen into the financial system is intended to stimulate spending in the world’s third-largest economy. It’s an acknowledgement that Prime Minister Shinzo Abe’s government has so far failed in its broad efforts to revive growth, especially after a sales tax hike took effect in April. The latest data show consumer spending falling, unemployment rising and excessively low inflation dipping further.

By injecting more money into the economy, the government hopes to raise expectations of higher inflation and thereby encourage people to spend and fuel growth.