(MENAFN- AFP) Russia announced plans Monday to limit grain exports as it scrambled to avoid a hike in the politically sensitive cost of bread during the holidays, the latest in a series of moves by Moscow to cope with the consequences of its currency crisis.
Meanwhile China offered unspecified help to Russia, which is dealing with a collapse of the ruble due to tumbling oil prices and Western sanctions that threaten to push the country into a severe recession and forced the government to help banks and consider supporting airlines.
Moscow said Monday that the customs barrier on grain exports was aimed at ensuring its own food security as the currency crisis bites.
The announcement drove global grain prices up, but analysts said ample world stocks should keep the price of wheat from spiking.
The ruble has fallen nearly 50 percent against the dollar and euro this year, which has made exporting grain far more profitable for Russian farmers and, despite one of the best harvests on record, domestic wheat prices have started to soar.
"We had a good harvest but at the same time, due to the volatility of the ruble, prices are very advantageous and exports have risen considerably," Prime Minister Dmitry Medvedev said at a government meeting.
- 'Food security' -
"We need to have minimum reserves that assure Russia's food security. In this context I think it is time to reflect on administrative restrictions on exports," he added.
The measures could be signed by Medvedev within 24 hours, deputy prime minister Arkady Dvorkovich was quoted as saying by Russian news agencies.
Wheat prices climbed in European trading following the announcement, after having already jumped more than four percent last week on the Chicago exchange as traders feared that Russia, usually the world's number three grain exporter, might impose an export ban as it did in 2010 when it suffered a poor harvest.
"The market had already anticipated... informal restrictions. Now they are formal," said Sebastien Poncelet, an analyst with the French consultancy Agritel, describing heightened "tension and volatility" in grain trading.
Poncelet said a sharp spike in wheat prices was not certain because buyers could turn to corn, which is in great supply.
Russian authorities denied last week they were considering an export ban, but there were indications that the government had been trying to slow exports by limiting train shipments and export certificates in order to keep the politically sensitive price of bread from soaring.
The business daily Kommersant reported recently that the price of bread could jump by 10 percent in the coming weeks as Russians celebrate the holidays.
The ruble plunged by 10 percent last Monday and then 20 percent on Tuesday despite a massive hike in interest rates as Russian consumers lost confidence in the government's ability to grapple with the crisis.
As Russia is dependent on oil exports for half of its revenue, the 50 percent drop in oil prices these past six months has had more of a direct impact on Russia than Western sanctions against Moscow for annexing Crimea and supporting separatists in eastern Ukraine.
Analysts see Russia's economy contracting by up to 5.0 percent next year and inflation shooting up to 20 percent.
- Ruble recovers -
While the ruble rose on Monday, returning to 67 to the euro and 55 to the dollar after having hit records of over 100 to the euro and 80 to the dollar, the economic problems are far from over.
Officials said they were considering supporting airlines which are facing a squeeze on paying for fuel and landing charges at foreign airports.
Meanwhile the central bank had to bail out the country's 15th largest lender in terms of deposits, while lawmakers last week approved a plan to inject 13 billion euros into commercial banks.
Numerous companies have at least temporarily halted business because of the swings in the value of the ruble, with an English-language daily -- The Saint Petersburg Times -- saying Monday it was ceasing publication due to the currency crisis.
Meanwhile China signalled its willingness to help Russia, although it voiced confidence Moscow that can overcome the current crisis on its own.
"If the Russian side needs, we will provide necessary assistance within our capacity," Foreign Minister Wang Yi was quoted as telling reporters over the weekend by the English-language China Daily on Monday.
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