* Rouble close to low reached after Crimea annexed in March
* Dollar denominated shares down 3.5 percent over the week
* Savings on imports outweighed by investor exodus-analysts
* Car sales plummet, trend unlikely to be reversed
(Updates with closing prices)
By Jason Bush and Vladimir Abramov
MOSCOW, Aug 8 The rouble ended the week close to
an all-time low following Moscow's decision to ban most food
imports from the West in retaliation for sanctions over Ukraine
and warnings from NATO that Russia appeared ready to invade its
Analysts said any positive impact on Russia's balance of
payments from Thursday's ban was outweighed by an investor
exodus due to the conflict since mid-April between pro-Russian
rebels and government forces in eastern Ukraine.
"The markets are preparing for the worst based on what's
going on in east Ukraine, where the fighting continues, no one
wants to agree with anyone and Russia is building up troops on
the border," said Igor Akinshin from Alfa Bank.
The rouble eased 1.5 percent versus the dollar this week
, not far off an all-time low of 36.73 reached in
March after Russia annexed Ukraine's Crimea peninsula. Dollar
denominated Russian stocks were down 3.5 percent.
The ban on all meat, fish, dairy, fruit and vegetables from
the United States, the 28 European Union countries, Canada,
Australia and non-EU member Norway will last a year, showing
President Vladimir Putin is preparing for a long stand-off.
A stronger than expected measure, it could isolate Russian
consumers to a degree unseen since Soviet days. Sanctions and
the currency's slide have already bankrupted several airlines
and tourist firms, ruining summer holidays for many Russians.
The government has also upset the middle class by approving
a plan to use contributions to employees' privately managed
pension funds to plug budget holes for a second year running.
In a sign ordinary Russians' purchasing power is declining,
car sales slumped 23 percent year-on-year in July after a 17.3
percent decline in the previous month.
"The overall trend is worrisome, and unlikely to improve
fundamentally any time soon," said Joerg Schreiber, Chairman of
the Automobile Manufacturers Committee at the Association of
European Businesses lobby group.
State-controlled VTB and Dutch bank ING said investors chose
to ignore the potential positive implications of the import ban.
"The import ban is marginally positive in a 6-12 month
period as a general factor affecting the current account, but
currently capital outflows are still on a higher scale than
this," said Dmitry Polevoy, Russia economist at ING.
Russians tracked the rouble-dollar rate very closely in the
1990s and early 2000s as they saw the U.S. currency as the best
protection against galloping inflation.
That attitude has changed during Putin's 14-year rule, when
relative macroeconomic stability on the back of high oil prices
allowed people to forget about foreign exchange rates.
That now seems to be coming to an end with the bans likely
to push inflation well above the government's targets and
disappointed investors sending billions of dollars abroad as
capital flight accelerates.
"Another round of more hawkish actions and rhetoric could
put additional pressure on the rouble," VTB said on
Friday. "Capital outflows - namely the potential dollarisation
of deposits - are the key risks".
Analysts polled by Reuters at the end of last month
predicted that capital outflows would reach $118 billion this
year, almost double last year's figure.
ING economist Polevoy estimated that the ban on western food
imports would save Russia around $800 million a month, a figure
probably less than the increase in capital flight as investors
flee rouble assets.
"So currently nobody cares about the current account, nobody
cares about the trade balance, probably nobody even cares about
the high carry (high interest rates) in Russia. People who just
want to get out of the country, out of Russian assets, are
trying to do it."
Investors fear a further escalation following statements
from NATO that Russia has amassed large numbers of troops on the
border and may invade under the guise of a peacekeeping
operation. Moscow has accused Kiev of killing hundreds of
civilians in east Ukraine but has denied it has any plan to send
troops across the border.
On Friday, the rouble strengthened slightly on the day and
shares were up more than 1 percent, recovering from earlier
losses, after a senior Russian security official said Moscow was
willing to act as an intermediary to de-escalate the crisis.
Some analysts were sceptical.
"Talk is cheap, and Moscow has many times previously made
similar comments calling for negotiations, de-escalation, et al,
but its actions on the ground have suggested other things," said
Timothy Ash, chief emerging markets analyst at Standard Bank.
For rouble poll data see
For Russian equities guide see
For Russian treasury bonds see
Russia in graphics: link.reuters.com/dun63s
(Additional reporting by Alexander Winning; Writing by Dmitry
Zhdannikov; Editing by Catherine Evans)