Alfa Bank\'s Weekly Report

NEWS OF THE WEEK



President confirmed weakening in fiscal policy, we keep 12% inflation
target for next year but see 6.2% growth rate



Exchange and money markets
The lack of support for the dollar on behalf of the CBR is unsettling
market players and has led to a further strengthening of the ruble. The
strengthening flow of petrodollars is having a supporting effect on the
ruble.

Some worsening of ruble liquidity is likely only on Friday as part of
preparation for tax payments and placements planned for next week.



Ruble bonds market
This week, all factors point towards a continuation of the price rally in
the ruble debt segment. Even first tier bonds have yet not fully reacted
to yield declines in related sectors. At the same time, less liquid bonds
in the 2nd and, in particular the 3rd tier, have not managed to react to
the change in the market situation.

In the sub-federal sector, demand is continuing for Moscow-39, while
preparation has begun for the placement of bonds of Samara region



Eurobond market
This week the market will continue to estimate the damage to the US
economy from Hurricane Katrina. Investors primarily want to know whether
rise in oil prices will have an effect on inflation or economic growth.
Prices of Russian Eurobonds are being supported by high oil prices and
expectations of an upgrade of the country?s sovereign rating by Moody?s.
Russia-30 this week may surpass the level of 116% of nominal.