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Ask HN: Why does the Ruble still hold 50% of its value?

45 points by TekMol 5y ago

Over the last weeks, the Ruble/USD ratio has declined by roughly 50%. That means that some actors still buy Ruble for 50% of its old value. Who is that? What can they do with the Ruble they buy?

nojito 5y ago
You can only settle certain debts by using the RUB which will then be exchanged back into USD/YEN/GBP/EUR. When all the debt obligations are settled and no new debt can be allocated, you will see a free fall.
colechristensen 5y ago
Russia has $640 billion in foreign currency, a functioning economy with significant petroleum exports and many trading partners not aligned with NATO.
- adventured 5y ago
  They don't have access to $640 billion in reserves. Half of those reserves are locked up under foreign control [1] and may be taken from Russia as compensation for Ukraine (properly). Russia is now admitting they're going to default on foreign debt because they can't pay [2]. "Banks are stopping Putin from tapping a $630 billion war chest Russia stockpiled before invading Ukraine" "... it turns out that Russia’s foreign reserves strategy had a major flaw: About half of the money was held overseas in foreign banks—and now Russia can’t get to it. " [1] https://fortune.com/2022/03/03/russia-sanctions-central-bank-ruble-us-eu-foreign-reserves/ https://fortune.com/2022/03/03/russia-sanctions-central-bank... [2] "Russia says debt payments abroad hinge on unfreezing of reserves." https://www.bloomberg.com/news/articles/2022-03-10/russia-says-debt-payments-abroad-hinge-on-unfreezing-of-reserves https://www.bloomberg.com/news/articles/2022-03-10/russia-sa...
  - sigsergv 5y ago
    We don't know structure of Russia reserves, all public information about it is almost a year old. Some experts think that almost all reserves in foreign currency are in yuans.
mytailorisrich 5y ago
Russia has 140 million people, the world's 11th economy, and, despite the impression one might have watching the news, only US/Europe (plus usual dependencies in Asia) have imposed sanctions on them. That is to say, there is still a lot of trade between Russia and the outside world (and the central bank does not seem to be printing money like mad). Edit: It looks like the 50% drop only last a day. The rubble has since steadily somewhat recovered to 'only' about a 30% drop, which may also be due to Russian government intervention.
- blibble 5y ago
  was the world's 11th largest economy that's going to go way, way down (especially as 12/13/14/15 are very close indeed)
- century19 5y ago
  The Netherlands is 17th, 18m population. With the population and resources Russia has you might expect them to be higher up.
  - unfocussed_mike 5y ago
    It's a reasonable point. Russia does have some structural disadvantages compared with the Netherlands (e.g. it is stretched out over a whole lot of extremely cold territory and it has a crumbling soviet infrastructure in places where it should not) but is in the position that it is in quite a large part due to corruptly exfiltrated wealth over almost two generations. Money that should have gone to fixing that infrastructure has instead disappeared out of the country, starting in smaller ways through the more western-friendly comecon states and then accelerating with every market reform. That money now creates wealth entirely in the West and has done for thirty years.
    - watwut 5y ago
      It has also heavily corrupt economic and state administration. That is actual disadvantage too.
tacostakohashi 5y ago
> Who is that? There are 140 million people that live in Russia. > What can they do with the Ruble they buy? Buy their groceries, pay their taxes, that kind of thing.
- cirgue 5y ago
  This is a weirdly hostile and condescending answer to a serious question. If the international exchange value of the ruble were zero Russians could still theoretically do these things, exchange value matters for doing business across borders/currencies at some point. Are we saying the exchange value of the ruble is being propped up by Russians who have dollar- or euro-denominated accounts purchasing rubles to run to the store to get eggs? That seems absurd.
  - sgjohnson 5y ago
    > Are we saying the exchange value of the ruble is being propped up by Russians who have dollar- or euro-denominated accounts purchasing rubles to run to the store to get eggs? That seems absurd. Except they passed a law that made ordinary Russians to convert their currency holdings to at least 80% RUB Here's a source that mentions "exporters", but recently they extended this to cover absolutely everyone. https://edition.cnn.com/2022/03/09/business/ruble-russia-central-bank/index.html https://edition.cnn.com/2022/03/09/business/ruble-russia-cen...
    - cirgue 5y ago
      This is my point. There’s more to this question than just “well the Russians want to buy things”
    - patrakov 5y ago
      The article is inaccurate, unless the law on paper and the actually applied rules are different. Regarding the mandatory 80% sale of foreign-currency income, on paper, it does not apply to the income earned before 2022-01-01. So the majority of my EUR balance is still in my account.] The ban for making bank transfers outside Russia, on paper, applies only to transfers to one's own accounts abroad. There are reports that SWIFT transfers from non-sanctioned banks to accounts held by others still work - but I haven't tested this. Heh, it might be a good time to buy a small villa abroad while this is still legal ;)
minusf 5y ago
"Let's discuss Russian economy." https://twitter.com/kamilkazani/status/1501360272442896388?s=21 https://twitter.com/kamilkazani/status/1501360272442896388?s...
- enriquto 5y ago
  This is a very interesting and thought provoking point of view (s/twitter.com/nitter.net/ to read it). I'd love to see a similar scathing breakdown of the economies of other countries, as well. I guess most of this systemic entrenchment of corruption is not unique to Russia or Mexico, but it happens elsewhere, in different degrees.
willcipriano 5y ago
You can buy oil and gas with rubles can't you?
- daniel-cussen 5y ago
  Hey yeah buy some nickel and wheat, I hope Russia still accepts roubles for them.
- ianpurton 5y ago
  Oil and gas is most likely settled in USD or EUR
achempion 5y ago
There is a rule [0] which forces Russian companies to sell at least 80% of currency revenues (including all new incoming payments). 0: https://cbr.ru/eng/press/pr/?id=35755 https://cbr.ru/eng/press/pr/?id=35755
CPLX 5y ago
A Chinese company could produce finished steel products for export to the United States, receive dollars in exchange, and exchange them to purchase Russian coal which is then used to produce more steel products. One example of millions.
LatteLazy 5y ago
Russia exports a tonne of gas and oil for a start. And there are no real sanctions on that yet because Europe needs to buy it or freeze in the dark. And even if the west did sanction those, they could still sell to China or 100 other countries. And remember, if Ruble's are half price right now, then anything outsiders can buy with them is half price too. That's a boon for anyone buying/selling gas or oil.
- allendoerfer 5y ago
  Russia cannot sell European gas to China, because Russia does not have pipelines from West to East.
  - LatteLazy 5y ago
    Who gets to sanction who will basically come down to whether Russia or Europe can connect to other Consumers/Producers first I think. If Russia can find and deliver it's oil to a new customer (China? It can cut Europe off). If Europe can find and connect to a new supplier of gas first it can stop paying Russian. Seems like it should be easier for Russia but I'm no expert.
- martin_a 5y ago
  > And even if the west did sanction those, they could still sell to China or 100 other countries. This implies that 100 other countries (that are not yet a customer of Russian gas and oil) would be willing and able to buy the same amount. That is probably not the case.
zaptheimpaler 5y ago
Maybe because things haven't changed so much. As of today, the Nord Stream pipeline is still functional and pumping gas [1]. India & China are continuing to do business with them. Despite the impression headlines give, a country or currency does not collapse overnight. [1] https://english.alarabiya.net/News/world/2022/03/11/Russian-gas-flows-on-key-pipelines-to-Europe-remain-steady https://english.alarabiya.net/News/world/2022/03/11/Russian-...
- deepstack 5y ago
  It would insane for Europe (Germany) to stop getting those gas (especially in the middle of winter). For many Europeans Russian is part of Europe.
  - blibble 5y ago
    the EU is planning to cut their Russian gas demand by 2/3rds by the end of 2022
    - StreamBright 5y ago
      Please be aware what planning means in the EU. It might happen or might not.
    - lm28469 5y ago
      After killing both nuclear and russian gas I wonder how they'll do. French politicians are already calling for people to reduce their home temperature by 2 degrees C to not be impacted by the Russian gas being cut off, and France uses way less Russian gas than Germany. With German electricity already being twice as expensive as France I'm worried for my 2022 electricity bill
    - polski-g 5y ago
      Are they going to get the energy from unicorns?
    - fulafel 5y ago
      Also half of EU gas comes from Russia, and 40% of residential heating energy is gas. So even before cuts Russian gas totaled 20% of residential heating energy, big slice but less than what is often made out in headlines and many of these consumers have air heat pump installed as well.
eyko 5y ago
Simplifying: contrary to popular (western) opinion, there are countries outside of the US/EU sphere of influence that still trade with Russia, Cuba, etc. And US/EU haven't completely stopped trading with (nor in) Russia.
- ajuc 5y ago
  Cuba and similar countries are almost completely irrelevant for USD-RUB exchange rate. RUB keeps part of its value mostly because west still buys fossil fuels from Russia.
- rosndo 5y ago
  Even China, India and UAE are heavily restricting trade with Russia. None of my banks in these countries are accepting transfers from Russia. My fixers in Russia confirm the same, and say the best they can do is exchange money into cryptocurrency via Kyrgyzstan. Pretty sure everything but oil/gas/metals has been pretty much entirely cut off.
  - muzani 5y ago
    Apparently China still trades with them ("barley and consumer goods") but they're not proud of it: https://www.scmp.com/economy/global-economy/article/3169114/china-russia-trade-continues-despite-western-sanctions https://www.scmp.com/economy/global-economy/article/3169114/... I believe the global economy has lockdown fatigue thanks to COVID and even the sanctions may not be as tight.
- hackernewds 5y ago
  China. UAE. Goldman Sachs https://www.nbcnews.com/politics/politics-news/goldman-sachs-profits-ukraine-war-loophole-sanctions-rcna19584 https://www.nbcnews.com/politics/politics-news/goldman-sachs... Where there are crumbs there will be birds.
  - ThePowerOfFuet 5y ago
    >Where there are crumbs there will be birds. This is wonderful.
londons_explore 5y ago
> Who is that? What can they do with the Ruble they buy? I purchased Rubles to buy stocks in some Russian companies. Since they're very cheap right now, it's really betting on the russian economy recovering post-war. I also thought now was a good time because large investors are being pushed out by the threat of government action if they don't, and threat of bad PR. So there are a lot of people selling large quantities at deep discounts. The downside risk is that my investments are removed from me by russian government rules (nationalisation), by western sanctions forcing me to sell, or simply a collapse of the russian economy and hyperinflation. But I think it's worth that risk.
- weavie 5y ago
  How did you do that with the stock exchange still closed?
  - londons_explore 5y ago
    I did it before the exchange closed...
- VLM 5y ago
  > hyperinflation If you actually own stock and not just sitting on the cash, you'll be fine if you own income producing assets. If you buy stock in, for example, a coal mine, and get annual dividends from operations equivalent to perhaps one rail car full of coal, "worth a couple grand $US in the 2020s", no matter what happens to currency values you'll still, in the very long run, average a dividend that boils down to being worth one rail car full of coal. For as long as people still buy coal, which is going to be more constant than short term political or economic turmoil, a rail car full of coal will always be worth about one months labor, no matter what numbers are used to value that labor. Might call that four thousand bucks, or an eighth of a million rubles, or now a quarter of a million rubles, or maybe a trillion rubles, but that stock will on average annually return about a month's labor.
devKnight 5y ago
could also be people buying it to speculate. ie: buy it now that its lost value, wait till the sanctions are lifted, these people could be expecting it to be over soon. when the value goes up, exchange back for your currency of choice ie: dollars, euros, etc etc
- acthrowthrow123 5y ago
  that would be quite a risky speculation. if you check historical price of rubble over 10 years it was always loosing value [1] [1] https://www.tradingview.com/symbols/USDRUB/ https://www.tradingview.com/symbols/USDRUB/
  - devKnight 5y ago
    can be, but that won't stop people from doing it. Because this is all brought on by sanctions, if the sanctions can be lifted and then Russia can continue to sell their commodities, fertilizer etc, it could hypothetically bounce back enough to make you a profit. Usually investors have a certain amount of money they throw at super risky trades, that might fail, so it in the end won't matter much to them if it goes nowhere.
300bps 5y ago
One thing to keep in mind - the price of the ruble doesn’t magically go down with intent. The quoted price moves with sales. So picture a scenario where literally nobody wants to buy the ruble. The price would literally remain unchanged. This may sound obvious but it does become a factor in extreme circumstances like this where trading volume is reduced. Now consider the actions the Russian central bank is using to shore up the ruble. First, they doubled interest rates to 20%. That makes owning an asset like the ruble (that has substantial principal risk) more attractive because you’ll be getting substantial income while holding it. Second, they also ordered Russian companies to sell 80% of their foreign currency revenues. This puts upward pressure on ruble and downward pressure on everything else. https://tradingeconomics.com/russia/interest-rate https://tradingeconomics.com/russia/interest-rate
mrfusion 5y ago
This post is kind of adorable. You can’t blame someone for thinking this if they’re drinking from the media firehouse. For example a popular post on reddit right now: https://old.reddit.com/r/interestingasfuck/comments/tbmdke/russian_man_throwing_money_in_a_shopping_mall/ https://old.reddit.com/r/interestingasfuck/comments/tbmdke/r...
aerodog 5y ago
It's as though OP takes joy in dumping on the currency 150 million people, mostly poor, use for their livelihood. We will look back on this period as a time of mob-think hysteria against Russians. One of those times where even if you say something decent about Russians, you may feel compelled to preface with "I'm no fan of Putin, but..."
- deleted 5y ago
  [deleted]
- daliusd 5y ago
  It looks like you are reading more than OP has actually written. I am equally interest to understand if sanctions will work as intended.
fxtentacle 5y ago
In Germany there's already discussions about lifting the sanctions because without cheap Russian gas, people might freeze. If that turns out to be the case, then whoever bought Rubles now at half their regular value is going to make a huge profit on buying gas/oil from that and selling it for Euros.
- adventured 5y ago
  There's no serious discussions of lifting sanctions in Germany at this point. The war has only barely just begun, Russia is genociding civilians. It would be an extraordinarily ugly public relations outcome for Germany to take that step right now. While NATO and Germany are busy trying to kill Russians with their weapons, pledging more by the day, they're going to stop sanctions? Nope. Sanctions on Russia will get worse yet. The war will likely get worse yet as well.
  - naruvimama 5y ago
    While NATO had placed sanctions on Iran, we had to pay for our oil imports through German banks, so a bit unsure if the German would ever leave money on the table.
- klaudius 5y ago
  EU used to produce its own energy, but environmentalists funded by Russia managed to reduce EU production and increase dependence on Russia. Hopefully those regulations can be reversed and EU can block Russia completely.
  - DFHippie 5y ago
    I'm pretty sure the environmentalists weren't arguing Europe should keep burning fossil fuels so long as they weren't extracted in Europe.
    - fer 5y ago
      Nah, they pushed against scary nuclear instead, and some bad actors (Schroeder) capitalized on it.
sgjohnson 5y ago
They passed a law that made ordinary people convert all their currency holdings to at least 80% RUB, therefore artificially creating demand for RUB.
- pakitan 5y ago
  That's incorrect. Only companies who receive foreign currency are forced to convert 80% of that to RUB.
- vbezhenar 5y ago
  That's not what I know. All people who receive USD from the foreign countries must exchange 80% of received USD for RUB. They can keep 20% in USD. That's mostly about businesses and freelancers. Another thing is: all people who had saving accounts in banks in USD can only withdraw $10k USD. Rest can be withdrawn in RUB or they can continue keeping it in bank hoping that things get better in the future. If I'm wrong, please provide source for you claim.
  - sgjohnson 5y ago
    I stand corrected, it indeed appears that it only affects exporters. But my original point still stands, this creates artificial demand for RUB.
throwaway_434 5y ago
Creating a throwaway as I have a controversial take on this (maybe even the minority opinion here): In my opinion, Ruble will become stable in few months (once the dust has settled that is). The sanctions are only imposed by the West (many Asian countries abstained from voting in UNSC). Russia will use Chinese Unionpay in-lieu of Mastercard/Visa and might integrate with Chinese CIPS (alternative to SWIFT). Probably even Indian Rupay in the future. It also has its own homegrown Mir Payment System. The sanctions jolt is going to be temporary. Ultimately SWIFT is going to not be dominant anymore. This is some hard reality that the West has to come to terms with. If anything, these sanctions have fast-tracked establishment of a multi-polar World and rejig of alliances. Don't forget that other countries, who supported sanctions against Russia (due to coercion or tight coupling with the Western World), are also watching what is unfolding. They are seeing the disparity between how NATO invaded Libya and none of the NATO countries faced any sanctions, while Russia invades Ukraine and faces massive sanctions. Libya hadn't threatened any NATO country nor had it invaded any non-NATO country. It was going through an internal civil war. Yet it was leveled and Gaddafi was dethroned, and lynched in public. So anyone who says NATO is a defensive alliance is just bullshitting. They'll all have a rethink on what it means to be allied with the West and follow a "Rules based order" that only applies to countries excluding the West. It naturally follows that they will want to balance out their National interests and not place all their eggs in one basket. One thing is for sure. These circumstances will only boost alternative forms of currency/payment systems. Imagine having the entire payment infrastructure controlled by handful of countries who can act with impunity. For whom, the so called "rules" don't apply but do apply for everyone else.
- redwood 5y ago
  I certainly hear what you are saying. You are correct there is a free world and there's a totalitarian world. What is sad is that the people in the totalitarian world don't know what they are missing
  - throwaway_434 5y ago
    Rather, do you in the free World see what is being shown to you in the free World as the Truth? Are you 100% sure that you aren't being shown a filtered version of what is actually happening? You just believe you are in a free World and that all actors are acting, not out of self interests, but for the greater good? Don't forget that it is the "free World" which allowed Bay of Pigs, invasion of Iraq, invasion of Afghanistan, invasion of Vietnam, invasion of Syria, invasion of Libya etc etc. 84 countries have been invaded by the so called "free World". Even Grenada wasn't spared (11th tiniest country in the World) with hardly any military. Bombed by USA. The Prime Minister of Grenada assassinated. When you look at it, from this perspective, you begin to question who is the actual totalitarian here? How many countries have dictators invaded? We all talk about Mao killing millions in China. True. Not going to defend it. But do you question Churchill who deliberately, as a matter of written policy, caused the Bengal Famine which resulted in millions of Bengalis dying? When he was told that Bengalis are dying, Churchil asked "if Gandhi had died yet?". I don't see Churchil being compared to Hitler anywhere. How about Regan? When the media questioned him about invasion of Grenada. That it was a flagrant violation of International Laws. That the UN General Assembly voted 108-9 against US invasion of Grenada. He famously said: "it didn't upset my breakfast at all". So where is this "Free World"? What use is a Democracy if you cannot stop an unjust War? What is the difference between your State and the so called "Totalitarian State"? Just that you can shout on the streets and register your protest? Is that the only difference? That won't get back millions of people who were killed by invasions from the so called "Free World". I belong to this so called "Free World" too. Yet I won't shy away from admitting that we are bloody hypocrites. We preach to the World on morality but we have done the worst of the worst things known to mankind. So what moral standing do I have to say: "Russia bad"? Nothing at all. We have done even worse. History is a witness to it. We can't lie our way out of it.
lordnacho 5y ago
Former FX trader here. A 50% collapse is huge, especially over such a short time. It's not like some WSB stock that represents just one little company, this is a whole economy. Now I'm not familiar with what exactly is allowed and now allowed now that they've been disconnected from SWIFT, so that's something someone at a bank might want to answer. One thing to look at that this might be temporary. If the sanctions work and Putin gets deposed, or if he wins and the West decide to just go back to normal and buy his natural gas, then you kinda want to have bought a bunch of Rubles cheaply that you can use in the post-war Russian economy. Those Rubles will suddenly become worth a lot more, which speculators will be thinking about. It's a bit of a question whether you can collect interest on your carry trade, but if you can and rates stay high you might think it a worthwhile investment.
- ianpurton 5y ago
  > Now I'm not familiar with what exactly is allowed and now allowed now that they've been disconnected from SWIFT, so that's something someone at a bank might want to answer. Most of your FX trades were probably settled in the back office over swift. Swift is a network you join and then you have access to the global economy and liquidity. So the real power of swift is the network effect. Join once connect to everyone.
manholio 5y ago
Russia is an export economy that finances half it's public spending directly from energy sales. Recently it had a very good trade surplus - each year it netted tens of billions of dollars more coming into its economy than going out. Most of those exports are still in place and, while some foreign exchange reserves were frozen, Russia still controls hundreds of billions worth, allowing it to support the ruble. It also very hard to stop this flow of foreign currency: as a permanent member of the UN security council, Russia cannot be subjected to is an embargo, all nations are free to trade with it from the point of international law. So assuming US, EU, Canada, Japan etc. all stop buying Russian oil and start buying from other sources, then that oil will be redistributed onto the the global oil market, maybe a few pennies cheaper, but Russia will still get it's money, now at record high prices. A thing that could help is stopping the gas purchases, that, due to limited infrastructure cannot be routed to other countries, but will clearly damage european economies. Also, pressure on China, India and other large economies, threats of secondary sanctions, making them chose if they want to trade with the western bloc or Russia, all these could really damage Russia. There were no substantial actions in this regard because it would hurt the west too, China is unlikely to simply roll over.
- NoPie 5y ago
  There were news that China refused to sell airplane parts to Russia (https://www.reuters.com/business/aerospace-defense/russia-says-china-refuses-supply-aircraft-parts-after-sanctions-2022-03-10/ https://www.reuters.com/business/aerospace-defense/russia-sa...). I am not really sure what happened but I can imagine that the US may demand suppliers not to sell to Russia. Considering that the US/western market is much bigger, the choice will be in favour of the west. As I said, the sanctions can become even stronger with time. Even Chinese and Indian suppliers are not entirely immune to pressure to stop trading with Russia. There will be no bipolar world. Very few countries openly supported Russia in the UN. Those who abstained/kept neutrality want to continue trading but clearly they don't consider Russian invasion into Ukraine acceptable and would have preferred that it never happened.
vbezhenar 5y ago
You can't buy USD in Russia right now without breaking the law. You can only sell USD. So it's obviously the main thing that keeps USD/Ruble ratio from falling.
- achempion 5y ago
  Do you have any proofs? There is a rule which forces you to exchange 80% of revenue but you can buy it back right away. You can also pay in some countries overseas with Mir/UnionPay and having your payment converted via RUB/USD pair. Currency exchange is also open as well, although you have to pay 12% fee when buying.
  - adventured 5y ago
    "Russia bars purchases of dollars by citizens in sign of hard-currency pinch" https://www.washingtonpost.com/business/2022/03/08/ruble-dollar-exchange-barred/ https://www.washingtonpost.com/business/2022/03/08/ruble-dol...
  - vbezhenar 5y ago
    I think that you correct about Mir/UnionPay, but I absolutely can ensure you that as an ordinary person you can't buy USD cash in bank. You can try to find someone shady or just someone who wants to sell USD to you for a better rate than bank, but it's illegal in any case. Another option is to visit some border country which accept rubles, like Kazakhstan, although in Kazakhstan there's currently shortage of dollars as well.
throwaway4good 5y ago
Over a one year period, the ruble is still doing better than the Turkish lira ...
NoPie 5y ago
In Soviet Union the official exchange rate was close to 1 rouble for 1 dollar. You couldn't exchange them, of course, except in some cases when you were allowed to travel etc. Now that the currency exchange activities are seriously limited in Russia the exchange rate stops being very meaningful measure.
pseingatl 5y ago
Russian gold reserves.
vintermann 5y ago
Russia is a big country. It produces many things, despite decades of oligarchs capturing as much as they can and stashing it abroad. No country that produces real things and issues its own currency needs to have a worthless currency. If it does, it's usually because the rulers are in desperate extraction mode, trying to ship as much value abroad as quickly as possible with no regards to the medium term consequences (either to creditors at gunpoint, or to private accounts). That may still happen in Russia, if Putin can't keep the oligarchs in line. But he pretty much has, since 2003. It can also happen in the slightly longer term if Russia strikes a desperate deal with China which goes wrong (that's basically what happened to Venezuela). But barring that, there won't be hyperinflation in Russia, "only" an Iceland-style one time devaluation (plus sanction-derived shortages, which Iceland dodged). Economically speaking, Putin can probably shield regular citizens from even Soviet-era scarcity, since the economy is still more productive despite oligarch looting. Whether he will is another matter.
dukoid 5y ago
Today a "linear" fall of the heights seems to have ended. It looked like somebody with the ability to sell a lot of Rubles was sending a message -- until now. Graph: https://twitter.com/dukoid/status/1502248440499216393/photo/1 https://twitter.com/dukoid/status/1502248440499216393/photo/...
true_religion 5y ago
I mean… Russia is still a superpower that spans two continents and is a capable of encircling the defenses of mid sized European states within days. It’s not as if Russia has no power, no population, no resources, and no economy simply because a few sanctions were placed on it. Plus, Russia put into place hard restrictions on exchanging currency keeping the value from plummeting out of mere panic.
- cableshaft 5y ago
  > is a capable of encircling the defenses of mid sized European states within days ...after mobilizing their forces to three sides of its border very visibly for several months. The US government first called this out in early December of 2021, and satellite imagery showed they were staging battalions and vehicles at least as far back as late November 2021. It's not like Putin decided "Hey everyone, I decided to invade Ukraine make it happen" and the next day hordes of troops and vehicles streamed out of Moscow and drove straight into Ukraine. Source: https://www.washingtonpost.com/national-security/russia-ukraine-invasion/2021/12/03/98a3760e-546b-11ec-8769-2f4ecdf7a2ad_story.html https://www.washingtonpost.com/national-security/russia-ukra...
- nreco 5y ago
  > is a capable of encircling the defenses of mid sized European states within days. ... and cannot encircle even Kyiv after 16 days of the war. Russia army is garbage, now we all see that its superpower is a fake.
- postingawayonhn 5y ago
  Russian isn't a superpower. They're just a dictatorship with a truckload of nuclear weapons.
throwaway_434 5y ago
HN has limited me so I am posting a comment here. First of all, I am happy that people are actually engaging instead of dismissing the comment as Russian Propaganda (though few have). Secondly, there are some important misconceptions: 1. One commenter said that "Nato did not invade Libya" and quoted UNSC resolution as the basis for intervention. This is not true at all. NATO did invade Libya on 31st March 2011. The UNSC resolution enforced a no-fly zone. It did not order a NATO invasion. Please read the resolution again (UNSC 1973). NATO flew 26,500 sorties. NATO invasion ended on 31st October 2011. Article 5 wasn't invoked either (the only time it was invoked was when 9/11 happened). So there was no need for NATO to intervene. But it still did. Even the no-fly zone was farcical. It was meant to protect civilians. General Carter Ham (Head of US Africa Command) said that he was unable to differentiate between civilians/rebels/Gaddafi forces etc [1]. It was up to the pilot to take a call on whether he wants to bomb or not. This was reported in April of 2011 as well where NATO planes erroneously bombed row of tanks that belong to the rebels [2] clearly violating UNSC resolution of protecting "civilians". In fact, the Indian and Brazilian representatives made the same point, when the UNSC 1973 was tabled, that the resolution was too vague and poorly drafted. That is why both countries abstained from voting for the intervention in Libya. [1]: https://www.wired.com/2011/03/u-s-general-we-wont-help-libyas-rebels-unless-we-do/ https://www.wired.com/2011/03/u-s-general-we-wont-help-libya... [2]: https://www.france24.com/en/20110408-doubt-over-nato-military-action-reports-casualties-rise-libya https://www.france24.com/en/20110408-doubt-over-nato-militar... 2. One commenter asked: "Do you think the Cuban Missile Crisis looked anything like what we're seeing in Ukraine right now?" We almost faced Nuclear Armageddon. So it was far worse. Right now, the situation is lopsided with Russia having clear dominance over Ukraine when it comes to nukes. Cuban Missile Crisis was even worse as it was two nuclear powers facing off. Check out "Black Saturday". US Navy dropped "signaling" depth charges on Soviet B-59 (which was a nuclear submarine). The captain of the submarine thought the War started and wanted to launch a nuke. It was averted thanks to a Commander who was onboard. If not for the Commander, it would have lead to end of the World as both countries would have launched counter nukes. 3. Why aren't you condemning Dictators/Authoritarians/Totalitarians etc? I am condemning them. But I am sick and tired of the hypocrisy that we in the "Free World" exhibit. We try to project that we are "Angels" and here to rescue people from all evil. Yet we are the biggest perpetrators of violence in the World. It is the "Free World" which invaded 84 countries, killed millions and displaced millions more. Hitler/Stalin/Mussolini/Putin/Mao/etc etc are all faces of evil. Just by statistics alone, we beat all of them combined. It is high time we acknowledge this and act on it. Stop unnecessary Wars. Stop setting precedents for others (Dictators/Extremists) to justify their wrongdoings.
usgroup 5y ago
I think what’d be nice in these politics debates is to see people literally listing and then referencing the facts they are relying on to make their arguments. Not always, just for these emotional, shouty, hyperbolic threads.
bigodbiel 5y ago
Simple: ruble conversion to USD or EUR is extremely limited; iirc only $10k can be withdrawn from dollar denominated accounts, currency exchange is largely restricted for business and individuals, the stock market remains closed, large businesses have been forced to sell foreign currency reserves, the Kremlin plans on repaying foreign debts in rubles only (ie technical default). The hope is that the west unfreezes its Central Bank reserves, meanwhile they are buying time.
specproc 5y ago
People in Russia, with savings in dollars, that need to buy things.
YaBomm 5y ago

45 points by TekMol 5y ago

Over the last weeks, the Ruble/USD ratio has declined by roughly 50%. That means that some actors still buy Ruble for 50% of its old value. Who is that? What can they do with the Ruble they buy?

nojito 5y ago

You can only settle certain debts by using the RUB which will then be exchanged back into USD/YEN/GBP/EUR. When all the debt obligations are settled and no new debt can be allocated, you will see a free fall.

colechristensen 5y ago

Russia has $640 billion in foreign currency, a functioning economy with significant petroleum exports and many trading partners not aligned with NATO.

adventured 5y ago
They don't have access to $640 billion in reserves. Half of those reserves are locked up under foreign control [1] and may be taken from Russia as compensation for Ukraine (properly). Russia is now admitting they're going to default on foreign debt because they can't pay [2]. "Banks are stopping Putin from tapping a $630 billion war chest Russia stockpiled before invading Ukraine" "... it turns out that Russia’s foreign reserves strategy had a major flaw: About half of the money was held overseas in foreign banks—and now Russia can’t get to it. " [1] https://fortune.com/2022/03/03/russia-sanctions-central-bank-ruble-us-eu-foreign-reserves/ https://fortune.com/2022/03/03/russia-sanctions-central-bank... [2] "Russia says debt payments abroad hinge on unfreezing of reserves." https://www.bloomberg.com/news/articles/2022-03-10/russia-says-debt-payments-abroad-hinge-on-unfreezing-of-reserves https://www.bloomberg.com/news/articles/2022-03-10/russia-sa...
- sigsergv 5y ago
  We don't know structure of Russia reserves, all public information about it is almost a year old. Some experts think that almost all reserves in foreign currency are in yuans.

mytailorisrich 5y ago

Russia has 140 million people, the world's 11th economy, and, despite the impression one might have watching the news, only US/Europe (plus usual dependencies in Asia) have imposed sanctions on them. That is to say, there is still a lot of trade between Russia and the outside world (and the central bank does not seem to be printing money like mad). Edit: It looks like the 50% drop only last a day. The rubble has since steadily somewhat recovered to 'only' about a 30% drop, which may also be due to Russian government intervention.

blibble 5y ago
was the world's 11th largest economy that's going to go way, way down (especially as 12/13/14/15 are very close indeed)
century19 5y ago
The Netherlands is 17th, 18m population. With the population and resources Russia has you might expect them to be higher up.
- unfocussed_mike 5y ago
  It's a reasonable point. Russia does have some structural disadvantages compared with the Netherlands (e.g. it is stretched out over a whole lot of extremely cold territory and it has a crumbling soviet infrastructure in places where it should not) but is in the position that it is in quite a large part due to corruptly exfiltrated wealth over almost two generations. Money that should have gone to fixing that infrastructure has instead disappeared out of the country, starting in smaller ways through the more western-friendly comecon states and then accelerating with every market reform. That money now creates wealth entirely in the West and has done for thirty years.
  - watwut 5y ago
    It has also heavily corrupt economic and state administration. That is actual disadvantage too.

tacostakohashi 5y ago

> Who is that? There are 140 million people that live in Russia. > What can they do with the Ruble they buy? Buy their groceries, pay their taxes, that kind of thing.

cirgue 5y ago
This is a weirdly hostile and condescending answer to a serious question. If the international exchange value of the ruble were zero Russians could still theoretically do these things, exchange value matters for doing business across borders/currencies at some point. Are we saying the exchange value of the ruble is being propped up by Russians who have dollar- or euro-denominated accounts purchasing rubles to run to the store to get eggs? That seems absurd.
- sgjohnson 5y ago
  > Are we saying the exchange value of the ruble is being propped up by Russians who have dollar- or euro-denominated accounts purchasing rubles to run to the store to get eggs? That seems absurd. Except they passed a law that made ordinary Russians to convert their currency holdings to at least 80% RUB Here's a source that mentions "exporters", but recently they extended this to cover absolutely everyone. https://edition.cnn.com/2022/03/09/business/ruble-russia-central-bank/index.html https://edition.cnn.com/2022/03/09/business/ruble-russia-cen...
  - cirgue 5y ago
    This is my point. There’s more to this question than just “well the Russians want to buy things”
  - patrakov 5y ago
    The article is inaccurate, unless the law on paper and the actually applied rules are different. Regarding the mandatory 80% sale of foreign-currency income, on paper, it does not apply to the income earned before 2022-01-01. So the majority of my EUR balance is still in my account.] The ban for making bank transfers outside Russia, on paper, applies only to transfers to one's own accounts abroad. There are reports that SWIFT transfers from non-sanctioned banks to accounts held by others still work - but I haven't tested this. Heh, it might be a good time to buy a small villa abroad while this is still legal ;)

minusf 5y ago

"Let's discuss Russian economy." https://twitter.com/kamilkazani/status/1501360272442896388?s=21 https://twitter.com/kamilkazani/status/1501360272442896388?s...

enriquto 5y ago
This is a very interesting and thought provoking point of view (s/twitter.com/nitter.net/ to read it). I'd love to see a similar scathing breakdown of the economies of other countries, as well. I guess most of this systemic entrenchment of corruption is not unique to Russia or Mexico, but it happens elsewhere, in different degrees.

willcipriano 5y ago

You can buy oil and gas with rubles can't you?

daniel-cussen 5y ago
Hey yeah buy some nickel and wheat, I hope Russia still accepts roubles for them.
ianpurton 5y ago
Oil and gas is most likely settled in USD or EUR

achempion 5y ago

There is a rule [0] which forces Russian companies to sell at least 80% of currency revenues (including all new incoming payments). 0: https://cbr.ru/eng/press/pr/?id=35755 https://cbr.ru/eng/press/pr/?id=35755

CPLX 5y ago

A Chinese company could produce finished steel products for export to the United States, receive dollars in exchange, and exchange them to purchase Russian coal which is then used to produce more steel products. One example of millions.

LatteLazy 5y ago

Russia exports a tonne of gas and oil for a start. And there are no real sanctions on that yet because Europe needs to buy it or freeze in the dark. And even if the west did sanction those, they could still sell to China or 100 other countries. And remember, if Ruble's are half price right now, then anything outsiders can buy with them is half price too. That's a boon for anyone buying/selling gas or oil.

allendoerfer 5y ago
Russia cannot sell European gas to China, because Russia does not have pipelines from West to East.
- LatteLazy 5y ago
  Who gets to sanction who will basically come down to whether Russia or Europe can connect to other Consumers/Producers first I think. If Russia can find and deliver it's oil to a new customer (China? It can cut Europe off). If Europe can find and connect to a new supplier of gas first it can stop paying Russian. Seems like it should be easier for Russia but I'm no expert.
martin_a 5y ago
> And even if the west did sanction those, they could still sell to China or 100 other countries. This implies that 100 other countries (that are not yet a customer of Russian gas and oil) would be willing and able to buy the same amount. That is probably not the case.

zaptheimpaler 5y ago

Maybe because things haven't changed so much. As of today, the Nord Stream pipeline is still functional and pumping gas [1]. India & China are continuing to do business with them. Despite the impression headlines give, a country or currency does not collapse overnight. [1] https://english.alarabiya.net/News/world/2022/03/11/Russian-gas-flows-on-key-pipelines-to-Europe-remain-steady https://english.alarabiya.net/News/world/2022/03/11/Russian-...

deepstack 5y ago
It would insane for Europe (Germany) to stop getting those gas (especially in the middle of winter). For many Europeans Russian is part of Europe.
- blibble 5y ago
  the EU is planning to cut their Russian gas demand by 2/3rds by the end of 2022
  - StreamBright 5y ago
    Please be aware what planning means in the EU. It might happen or might not.
  - lm28469 5y ago
    After killing both nuclear and russian gas I wonder how they'll do. French politicians are already calling for people to reduce their home temperature by 2 degrees C to not be impacted by the Russian gas being cut off, and France uses way less Russian gas than Germany. With German electricity already being twice as expensive as France I'm worried for my 2022 electricity bill
  - polski-g 5y ago
    Are they going to get the energy from unicorns?
  - fulafel 5y ago
    Also half of EU gas comes from Russia, and 40% of residential heating energy is gas. So even before cuts Russian gas totaled 20% of residential heating energy, big slice but less than what is often made out in headlines and many of these consumers have air heat pump installed as well.

eyko 5y ago

Simplifying: contrary to popular (western) opinion, there are countries outside of the US/EU sphere of influence that still trade with Russia, Cuba, etc. And US/EU haven't completely stopped trading with (nor in) Russia.

ajuc 5y ago
Cuba and similar countries are almost completely irrelevant for USD-RUB exchange rate. RUB keeps part of its value mostly because west still buys fossil fuels from Russia.
rosndo 5y ago
Even China, India and UAE are heavily restricting trade with Russia. None of my banks in these countries are accepting transfers from Russia. My fixers in Russia confirm the same, and say the best they can do is exchange money into cryptocurrency via Kyrgyzstan. Pretty sure everything but oil/gas/metals has been pretty much entirely cut off.
- muzani 5y ago
  Apparently China still trades with them ("barley and consumer goods") but they're not proud of it: https://www.scmp.com/economy/global-economy/article/3169114/china-russia-trade-continues-despite-western-sanctions https://www.scmp.com/economy/global-economy/article/3169114/... I believe the global economy has lockdown fatigue thanks to COVID and even the sanctions may not be as tight.
hackernewds 5y ago
China. UAE. Goldman Sachs https://www.nbcnews.com/politics/politics-news/goldman-sachs-profits-ukraine-war-loophole-sanctions-rcna19584 https://www.nbcnews.com/politics/politics-news/goldman-sachs... Where there are crumbs there will be birds.
- ThePowerOfFuet 5y ago
  >Where there are crumbs there will be birds. This is wonderful.

londons_explore 5y ago

> Who is that? What can they do with the Ruble they buy? I purchased Rubles to buy stocks in some Russian companies. Since they're very cheap right now, it's really betting on the russian economy recovering post-war. I also thought now was a good time because large investors are being pushed out by the threat of government action if they don't, and threat of bad PR. So there are a lot of people selling large quantities at deep discounts. The downside risk is that my investments are removed from me by russian government rules (nationalisation), by western sanctions forcing me to sell, or simply a collapse of the russian economy and hyperinflation. But I think it's worth that risk.

weavie 5y ago
How did you do that with the stock exchange still closed?
- londons_explore 5y ago
  I did it before the exchange closed...
VLM 5y ago
> hyperinflation If you actually own stock and not just sitting on the cash, you'll be fine if you own income producing assets. If you buy stock in, for example, a coal mine, and get annual dividends from operations equivalent to perhaps one rail car full of coal, "worth a couple grand $US in the 2020s", no matter what happens to currency values you'll still, in the very long run, average a dividend that boils down to being worth one rail car full of coal. For as long as people still buy coal, which is going to be more constant than short term political or economic turmoil, a rail car full of coal will always be worth about one months labor, no matter what numbers are used to value that labor. Might call that four thousand bucks, or an eighth of a million rubles, or now a quarter of a million rubles, or maybe a trillion rubles, but that stock will on average annually return about a month's labor.

devKnight 5y ago

could also be people buying it to speculate. ie: buy it now that its lost value, wait till the sanctions are lifted, these people could be expecting it to be over soon. when the value goes up, exchange back for your currency of choice ie: dollars, euros, etc etc

acthrowthrow123 5y ago
that would be quite a risky speculation. if you check historical price of rubble over 10 years it was always loosing value [1] [1] https://www.tradingview.com/symbols/USDRUB/ https://www.tradingview.com/symbols/USDRUB/
- devKnight 5y ago
  can be, but that won't stop people from doing it. Because this is all brought on by sanctions, if the sanctions can be lifted and then Russia can continue to sell their commodities, fertilizer etc, it could hypothetically bounce back enough to make you a profit. Usually investors have a certain amount of money they throw at super risky trades, that might fail, so it in the end won't matter much to them if it goes nowhere.

300bps 5y ago

One thing to keep in mind - the price of the ruble doesn’t magically go down with intent. The quoted price moves with sales. So picture a scenario where literally nobody wants to buy the ruble. The price would literally remain unchanged. This may sound obvious but it does become a factor in extreme circumstances like this where trading volume is reduced. Now consider the actions the Russian central bank is using to shore up the ruble. First, they doubled interest rates to 20%. That makes owning an asset like the ruble (that has substantial principal risk) more attractive because you’ll be getting substantial income while holding it. Second, they also ordered Russian companies to sell 80% of their foreign currency revenues. This puts upward pressure on ruble and downward pressure on everything else. https://tradingeconomics.com/russia/interest-rate https://tradingeconomics.com/russia/interest-rate

mrfusion 5y ago

This post is kind of adorable. You can’t blame someone for thinking this if they’re drinking from the media firehouse. For example a popular post on reddit right now: https://old.reddit.com/r/interestingasfuck/comments/tbmdke/russian_man_throwing_money_in_a_shopping_mall/ https://old.reddit.com/r/interestingasfuck/comments/tbmdke/r...

aerodog 5y ago

It's as though OP takes joy in dumping on the currency 150 million people, mostly poor, use for their livelihood. We will look back on this period as a time of mob-think hysteria against Russians. One of those times where even if you say something decent about Russians, you may feel compelled to preface with "I'm no fan of Putin, but..."

deleted 5y ago
[deleted]
daliusd 5y ago
It looks like you are reading more than OP has actually written. I am equally interest to understand if sanctions will work as intended.

fxtentacle 5y ago

In Germany there's already discussions about lifting the sanctions because without cheap Russian gas, people might freeze. If that turns out to be the case, then whoever bought Rubles now at half their regular value is going to make a huge profit on buying gas/oil from that and selling it for Euros.

adventured 5y ago
There's no serious discussions of lifting sanctions in Germany at this point. The war has only barely just begun, Russia is genociding civilians. It would be an extraordinarily ugly public relations outcome for Germany to take that step right now. While NATO and Germany are busy trying to kill Russians with their weapons, pledging more by the day, they're going to stop sanctions? Nope. Sanctions on Russia will get worse yet. The war will likely get worse yet as well.
- naruvimama 5y ago
  While NATO had placed sanctions on Iran, we had to pay for our oil imports through German banks, so a bit unsure if the German would ever leave money on the table.
klaudius 5y ago
EU used to produce its own energy, but environmentalists funded by Russia managed to reduce EU production and increase dependence on Russia. Hopefully those regulations can be reversed and EU can block Russia completely.
- DFHippie 5y ago
  I'm pretty sure the environmentalists weren't arguing Europe should keep burning fossil fuels so long as they weren't extracted in Europe.
  - fer 5y ago
    Nah, they pushed against scary nuclear instead, and some bad actors (Schroeder) capitalized on it.

sgjohnson 5y ago

They passed a law that made ordinary people convert all their currency holdings to at least 80% RUB, therefore artificially creating demand for RUB.

pakitan 5y ago
That's incorrect. Only companies who receive foreign currency are forced to convert 80% of that to RUB.
vbezhenar 5y ago
That's not what I know. All people who receive USD from the foreign countries must exchange 80% of received USD for RUB. They can keep 20% in USD. That's mostly about businesses and freelancers. Another thing is: all people who had saving accounts in banks in USD can only withdraw $10k USD. Rest can be withdrawn in RUB or they can continue keeping it in bank hoping that things get better in the future. If I'm wrong, please provide source for you claim.
- sgjohnson 5y ago
  I stand corrected, it indeed appears that it only affects exporters. But my original point still stands, this creates artificial demand for RUB.

throwaway_434 5y ago

Creating a throwaway as I have a controversial take on this (maybe even the minority opinion here): In my opinion, Ruble will become stable in few months (once the dust has settled that is). The sanctions are only imposed by the West (many Asian countries abstained from voting in UNSC). Russia will use Chinese Unionpay in-lieu of Mastercard/Visa and might integrate with Chinese CIPS (alternative to SWIFT). Probably even Indian Rupay in the future. It also has its own homegrown Mir Payment System. The sanctions jolt is going to be temporary. Ultimately SWIFT is going to not be dominant anymore. This is some hard reality that the West has to come to terms with. If anything, these sanctions have fast-tracked establishment of a multi-polar World and rejig of alliances. Don't forget that other countries, who supported sanctions against Russia (due to coercion or tight coupling with the Western World), are also watching what is unfolding. They are seeing the disparity between how NATO invaded Libya and none of the NATO countries faced any sanctions, while Russia invades Ukraine and faces massive sanctions. Libya hadn't threatened any NATO country nor had it invaded any non-NATO country. It was going through an internal civil war. Yet it was leveled and Gaddafi was dethroned, and lynched in public. So anyone who says NATO is a defensive alliance is just bullshitting. They'll all have a rethink on what it means to be allied with the West and follow a "Rules based order" that only applies to countries excluding the West. It naturally follows that they will want to balance out their National interests and not place all their eggs in one basket. One thing is for sure. These circumstances will only boost alternative forms of currency/payment systems. Imagine having the entire payment infrastructure controlled by handful of countries who can act with impunity. For whom, the so called "rules" don't apply but do apply for everyone else.

redwood 5y ago
I certainly hear what you are saying. You are correct there is a free world and there's a totalitarian world. What is sad is that the people in the totalitarian world don't know what they are missing
- throwaway_434 5y ago
  Rather, do you in the free World see what is being shown to you in the free World as the Truth? Are you 100% sure that you aren't being shown a filtered version of what is actually happening? You just believe you are in a free World and that all actors are acting, not out of self interests, but for the greater good? Don't forget that it is the "free World" which allowed Bay of Pigs, invasion of Iraq, invasion of Afghanistan, invasion of Vietnam, invasion of Syria, invasion of Libya etc etc. 84 countries have been invaded by the so called "free World". Even Grenada wasn't spared (11th tiniest country in the World) with hardly any military. Bombed by USA. The Prime Minister of Grenada assassinated. When you look at it, from this perspective, you begin to question who is the actual totalitarian here? How many countries have dictators invaded? We all talk about Mao killing millions in China. True. Not going to defend it. But do you question Churchill who deliberately, as a matter of written policy, caused the Bengal Famine which resulted in millions of Bengalis dying? When he was told that Bengalis are dying, Churchil asked "if Gandhi had died yet?". I don't see Churchil being compared to Hitler anywhere. How about Regan? When the media questioned him about invasion of Grenada. That it was a flagrant violation of International Laws. That the UN General Assembly voted 108-9 against US invasion of Grenada. He famously said: "it didn't upset my breakfast at all". So where is this "Free World"? What use is a Democracy if you cannot stop an unjust War? What is the difference between your State and the so called "Totalitarian State"? Just that you can shout on the streets and register your protest? Is that the only difference? That won't get back millions of people who were killed by invasions from the so called "Free World". I belong to this so called "Free World" too. Yet I won't shy away from admitting that we are bloody hypocrites. We preach to the World on morality but we have done the worst of the worst things known to mankind. So what moral standing do I have to say: "Russia bad"? Nothing at all. We have done even worse. History is a witness to it. We can't lie our way out of it.

lordnacho 5y ago

Former FX trader here. A 50% collapse is huge, especially over such a short time. It's not like some WSB stock that represents just one little company, this is a whole economy. Now I'm not familiar with what exactly is allowed and now allowed now that they've been disconnected from SWIFT, so that's something someone at a bank might want to answer. One thing to look at that this might be temporary. If the sanctions work and Putin gets deposed, or if he wins and the West decide to just go back to normal and buy his natural gas, then you kinda want to have bought a bunch of Rubles cheaply that you can use in the post-war Russian economy. Those Rubles will suddenly become worth a lot more, which speculators will be thinking about. It's a bit of a question whether you can collect interest on your carry trade, but if you can and rates stay high you might think it a worthwhile investment.

ianpurton 5y ago
> Now I'm not familiar with what exactly is allowed and now allowed now that they've been disconnected from SWIFT, so that's something someone at a bank might want to answer. Most of your FX trades were probably settled in the back office over swift. Swift is a network you join and then you have access to the global economy and liquidity. So the real power of swift is the network effect. Join once connect to everyone.

manholio 5y ago

Russia is an export economy that finances half it's public spending directly from energy sales. Recently it had a very good trade surplus - each year it netted tens of billions of dollars more coming into its economy than going out. Most of those exports are still in place and, while some foreign exchange reserves were frozen, Russia still controls hundreds of billions worth, allowing it to support the ruble. It also very hard to stop this flow of foreign currency: as a permanent member of the UN security council, Russia cannot be subjected to is an embargo, all nations are free to trade with it from the point of international law. So assuming US, EU, Canada, Japan etc. all stop buying Russian oil and start buying from other sources, then that oil will be redistributed onto the the global oil market, maybe a few pennies cheaper, but Russia will still get it's money, now at record high prices. A thing that could help is stopping the gas purchases, that, due to limited infrastructure cannot be routed to other countries, but will clearly damage european economies. Also, pressure on China, India and other large economies, threats of secondary sanctions, making them chose if they want to trade with the western bloc or Russia, all these could really damage Russia. There were no substantial actions in this regard because it would hurt the west too, China is unlikely to simply roll over.

NoPie 5y ago
There were news that China refused to sell airplane parts to Russia (https://www.reuters.com/business/aerospace-defense/russia-says-china-refuses-supply-aircraft-parts-after-sanctions-2022-03-10/ https://www.reuters.com/business/aerospace-defense/russia-sa...). I am not really sure what happened but I can imagine that the US may demand suppliers not to sell to Russia. Considering that the US/western market is much bigger, the choice will be in favour of the west. As I said, the sanctions can become even stronger with time. Even Chinese and Indian suppliers are not entirely immune to pressure to stop trading with Russia. There will be no bipolar world. Very few countries openly supported Russia in the UN. Those who abstained/kept neutrality want to continue trading but clearly they don't consider Russian invasion into Ukraine acceptable and would have preferred that it never happened.

vbezhenar 5y ago

You can't buy USD in Russia right now without breaking the law. You can only sell USD. So it's obviously the main thing that keeps USD/Ruble ratio from falling.

achempion 5y ago
Do you have any proofs? There is a rule which forces you to exchange 80% of revenue but you can buy it back right away. You can also pay in some countries overseas with Mir/UnionPay and having your payment converted via RUB/USD pair. Currency exchange is also open as well, although you have to pay 12% fee when buying.
- adventured 5y ago
  "Russia bars purchases of dollars by citizens in sign of hard-currency pinch" https://www.washingtonpost.com/business/2022/03/08/ruble-dollar-exchange-barred/ https://www.washingtonpost.com/business/2022/03/08/ruble-dol...
- vbezhenar 5y ago
  I think that you correct about Mir/UnionPay, but I absolutely can ensure you that as an ordinary person you can't buy USD cash in bank. You can try to find someone shady or just someone who wants to sell USD to you for a better rate than bank, but it's illegal in any case. Another option is to visit some border country which accept rubles, like Kazakhstan, although in Kazakhstan there's currently shortage of dollars as well.

throwaway4good 5y ago

Over a one year period, the ruble is still doing better than the Turkish lira ...

NoPie 5y ago

In Soviet Union the official exchange rate was close to 1 rouble for 1 dollar. You couldn't exchange them, of course, except in some cases when you were allowed to travel etc. Now that the currency exchange activities are seriously limited in Russia the exchange rate stops being very meaningful measure.

pseingatl 5y ago

Russian gold reserves.

vintermann 5y ago

Russia is a big country. It produces many things, despite decades of oligarchs capturing as much as they can and stashing it abroad. No country that produces real things and issues its own currency needs to have a worthless currency. If it does, it's usually because the rulers are in desperate extraction mode, trying to ship as much value abroad as quickly as possible with no regards to the medium term consequences (either to creditors at gunpoint, or to private accounts). That may still happen in Russia, if Putin can't keep the oligarchs in line. But he pretty much has, since 2003. It can also happen in the slightly longer term if Russia strikes a desperate deal with China which goes wrong (that's basically what happened to Venezuela). But barring that, there won't be hyperinflation in Russia, "only" an Iceland-style one time devaluation (plus sanction-derived shortages, which Iceland dodged). Economically speaking, Putin can probably shield regular citizens from even Soviet-era scarcity, since the economy is still more productive despite oligarch looting. Whether he will is another matter.

dukoid 5y ago

Today a "linear" fall of the heights seems to have ended. It looked like somebody with the ability to sell a lot of Rubles was sending a message -- until now. Graph: https://twitter.com/dukoid/status/1502248440499216393/photo/1 https://twitter.com/dukoid/status/1502248440499216393/photo/...

true_religion 5y ago

I mean… Russia is still a superpower that spans two continents and is a capable of encircling the defenses of mid sized European states within days. It’s not as if Russia has no power, no population, no resources, and no economy simply because a few sanctions were placed on it. Plus, Russia put into place hard restrictions on exchanging currency keeping the value from plummeting out of mere panic.

cableshaft 5y ago
> is a capable of encircling the defenses of mid sized European states within days ...after mobilizing their forces to three sides of its border very visibly for several months. The US government first called this out in early December of 2021, and satellite imagery showed they were staging battalions and vehicles at least as far back as late November 2021. It's not like Putin decided "Hey everyone, I decided to invade Ukraine make it happen" and the next day hordes of troops and vehicles streamed out of Moscow and drove straight into Ukraine. Source: https://www.washingtonpost.com/national-security/russia-ukraine-invasion/2021/12/03/98a3760e-546b-11ec-8769-2f4ecdf7a2ad_story.html https://www.washingtonpost.com/national-security/russia-ukra...
nreco 5y ago
> is a capable of encircling the defenses of mid sized European states within days. ... and cannot encircle even Kyiv after 16 days of the war. Russia army is garbage, now we all see that its superpower is a fake.
postingawayonhn 5y ago
Russian isn't a superpower. They're just a dictatorship with a truckload of nuclear weapons.

throwaway_434 5y ago

HN has limited me so I am posting a comment here. First of all, I am happy that people are actually engaging instead of dismissing the comment as Russian Propaganda (though few have). Secondly, there are some important misconceptions: 1. One commenter said that "Nato did not invade Libya" and quoted UNSC resolution as the basis for intervention. This is not true at all. NATO did invade Libya on 31st March 2011. The UNSC resolution enforced a no-fly zone. It did not order a NATO invasion. Please read the resolution again (UNSC 1973). NATO flew 26,500 sorties. NATO invasion ended on 31st October 2011. Article 5 wasn't invoked either (the only time it was invoked was when 9/11 happened). So there was no need for NATO to intervene. But it still did. Even the no-fly zone was farcical. It was meant to protect civilians. General Carter Ham (Head of US Africa Command) said that he was unable to differentiate between civilians/rebels/Gaddafi forces etc [1]. It was up to the pilot to take a call on whether he wants to bomb or not. This was reported in April of 2011 as well where NATO planes erroneously bombed row of tanks that belong to the rebels [2] clearly violating UNSC resolution of protecting "civilians". In fact, the Indian and Brazilian representatives made the same point, when the UNSC 1973 was tabled, that the resolution was too vague and poorly drafted. That is why both countries abstained from voting for the intervention in Libya. [1]: https://www.wired.com/2011/03/u-s-general-we-wont-help-libyas-rebels-unless-we-do/ https://www.wired.com/2011/03/u-s-general-we-wont-help-libya... [2]: https://www.france24.com/en/20110408-doubt-over-nato-military-action-reports-casualties-rise-libya https://www.france24.com/en/20110408-doubt-over-nato-militar... 2. One commenter asked: "Do you think the Cuban Missile Crisis looked anything like what we're seeing in Ukraine right now?" We almost faced Nuclear Armageddon. So it was far worse. Right now, the situation is lopsided with Russia having clear dominance over Ukraine when it comes to nukes. Cuban Missile Crisis was even worse as it was two nuclear powers facing off. Check out "Black Saturday". US Navy dropped "signaling" depth charges on Soviet B-59 (which was a nuclear submarine). The captain of the submarine thought the War started and wanted to launch a nuke. It was averted thanks to a Commander who was onboard. If not for the Commander, it would have lead to end of the World as both countries would have launched counter nukes. 3. Why aren't you condemning Dictators/Authoritarians/Totalitarians etc? I am condemning them. But I am sick and tired of the hypocrisy that we in the "Free World" exhibit. We try to project that we are "Angels" and here to rescue people from all evil. Yet we are the biggest perpetrators of violence in the World. It is the "Free World" which invaded 84 countries, killed millions and displaced millions more. Hitler/Stalin/Mussolini/Putin/Mao/etc etc are all faces of evil. Just by statistics alone, we beat all of them combined. It is high time we acknowledge this and act on it. Stop unnecessary Wars. Stop setting precedents for others (Dictators/Extremists) to justify their wrongdoings.

usgroup 5y ago

I think what’d be nice in these politics debates is to see people literally listing and then referencing the facts they are relying on to make their arguments. Not always, just for these emotional, shouty, hyperbolic threads.

bigodbiel 5y ago

Simple: ruble conversion to USD or EUR is extremely limited; iirc only $10k can be withdrawn from dollar denominated accounts, currency exchange is largely restricted for business and individuals, the stock market remains closed, large businesses have been forced to sell foreign currency reserves, the Kremlin plans on repaying foreign debts in rubles only (ie technical default). The hope is that the west unfreezes its Central Bank reserves, meanwhile they are buying time.

specproc 5y ago

People in Russia, with savings in dollars, that need to buy things.

YaBomm 5y ago