Russia sees massive capital outflow on war with Georgia

NEW YORK (MarketWatch) — Russia’s foreign exchange reserves fell by $16.4 billion to stand at $581.1 billion during the week starting Aug. 8 and ending Aug. 15, when war broke out between Russia and Georgia over the breakaway region of South Ossetia, according to figures released Thursday by the central bank of Russia. “This is to the best of our knowledge by far the largest one-week capital outflow in Russia’s history, larger than the $12 billion outflow in the third quarter of 1998, at the time of the financial crisis,” wrote analysts at Goldman Sachs New Markets Economic Research. The first two days of the war in South Ossetia provoked a sharp depreciation of the ruble against its dual currency basket which was halted only by central bank interventions, the analysts said. “We now have an idea of the magnitude of those interventions,” they said.
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