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Ask HN: Why did the ruble stabilize and what's going on?
Today the Ruble is worth more than 2 months ago before the Russian invasion of Ukraine. Can any economists chime in and explain why this is happening? Inflation in Russia looks to be high but similar to the one in Lithuania for example. Ukraine inflation is lower which in my dilettante view doesn't make sense.
It looks like it's business as usual and war doesn't really have any impact on global economy at the moment. Prices were going up before Feb anyway.
So what's going on?
- maxfromua 4y agoLet me tell you an old Jewish anecdote from Odesa (Ukrainian city with a significant Jewish population; russians hit a residential building there using a missile strike today, a few people died, 1 kid among them). - Moisha, what’s the price of this meat? - Abraham, it is 300 UAH/kilogram. - But your neighbor is selling at 200 UAH/kg. Why yours is so expensive? - Why don’t you buy there then? - He doesn’t have it anymore. - Well, when I don’t have meat, I sell it at 100 UAH/kg. So, the price can be any when you don’t have a free market. In USSR, the official exchange rate was 0,7 rouble per dollar. Black market was 2-3 (might differ, depending on the year, of course). Recently I have seen photo with X-rates in moscow: USD buying at 70, selling at 300 EUR buying at 80, selling at 100 Looks silly, right? Everyone knows EUR costs more than USD. The reason is the same as in the anecdote above.
- xyzzy21 4y agoSimple. 1. Russian anticipated the sanctions - this isn't the first time - so Russian had some plans in place. They've been dumping US Fed Treasuries and hoarding gold. That's part of removing USD dependence. 2. Russian has plenty of internal resources with plenty of industry to replace enough (not all) of the sanctioned imports. 3. Russians support Putin at nearly 80%. Sanctions have electrified Russian patriotism. A funny set of Tweets are Russian women tearing up the expensive Coco Chanel products. That's thousands of USD worth torn up because patriotism. 4. Russian has the EU by the balls because Green Energy doesn't and won't replace the Russian exports of oil and nat gas; compounding that is Germany shutting down nuclear power plants exactly when they can least afford it. The next play: demanding payment of the same oil and gas in Rubles rather than USD. The assumption that the USD is supreme is wrong and provably so now with the Ruble rebound. 5. Russian has plenty of allies who leak past the sanctions - like 2/3rds of the world's countries by population - it's LITERALLY only the West who is sanctioning. This is akin to how Cuba was/is embargoed ONLY by the US but not Canada or Mexico. 6. By doubling down on sanctions the US has primarily weakened the Petrodollar which is the ONLY REASON the USD is as strong as it is and the only reason we have the lifestyle levels we have today despite having very low economic production - we'd be closer to Portugal in effective economic strength without having USD reserve currency status. It's a subsidy that has made and still makes us super lazy and entitled. 6a. The US is still living in the delusion of being unipolar and "indispensable". That is no longer reality and sanctions accelerated the move to multipolar.
- Chyzwar 5y agohttps://www.youtube.com/watch?v=aEpk_yGjn0E https://www.youtube.com/watch?v=aEpk_yGjn0E Decent analysis of current Russia economy.
- goodmachine 5y agoThank you. Excellent and informative
- CamperBob2 5y agoNot an economist, but my understanding is that they propped up the ruble by requiring it to be used for transactions that could previously have settled in other currencies, and by forbidding certain foreign currency purchases. If you can't buy dollars, it doesn't matter what the exchange rate is. Obviously that won't work, long term.
- NoPie 5y agoI heard that the black market rate is something around 120 RUB per dollar which is almost double the official rate.
- crownvic 5y agoNope. 88-91 RUB/USD if you want to buy crypto (something like USDT), and 83 RUB/USD if you're buying something at Aliexpress (i.e., buying from China and paying in USD).
- hatenberg 5y agoDead Cat Bounce brought to you by lots and lots of spending/maneuvering. Not sustainable. In about 2-3 months, Russia is fucked and will be forced to move to a new economic model apart from the world. The entire gambit was to take UA quickly and then use it as a pawn to get concessions from the West Now they are finding themselves fighting a nation with a direct IV line from the US defense budget (similar to Israel) and that's not a winning position to be in given that the US alone is 10x defense spend - not even counting UK, the baltic states, etc.
- oblio 5y ago> The entire gambit was to take UA quickly and then use it as a pawn to get concessions from the West. Nope, it was to take Ukraine quickly and parade it as an internal trophy, while also taking out a possible big competitor for the oil and gas market. Putin didn't want any concessions from the West, just business as usual. He wanted to be left alone to "digest Ukraine" and ponder next steps. Edit: I'd want to hear proof for contrary opinions.
- pjc50 5y agoI'm not sure anyone knows the "real" reason for all this, although we've heard a lot of stated ones.
- oblio 5y agoUkraine was "not negotiable" Russian according to multiple statements from Putin, so that part about "negotiating concessions" is provably false. Why that was the case is indeed complex. Russia did not try to negotiate Ukraine away initially. The messaging was clear: it's ours. Now they might negotiate something because Ukraine is kicking their teeth in, but that's after the fact and completely forced.
- lolc 5y agoLies of the Russian government about non-negotiability can be ignored much like the statements about non-invasion turned out to be lies. I don't see how they'd prove anything.
- kalmi10 5y agoI remember hearing on France 24 (from Anastasiya Shapochkina iirc) when the sanctions were just being introduced that the sanctions would effectively make it cheaper for Russia to finance the war as most their monetary assets are in foreign currencies while most of their expenses are in rubel.
- Aeolun 5y agoThe big problem being that they can’t actually access most of those foreign assets now.
- hdjjhhvvhga 5y ago> problem Makes you think about the inherent subjectivity of certain words.
- postsantum 5y ago> access true. I can't access my wallet that was robbed from me
- kalmi10 5y agoThe way she put it led me to believe that there were significant non-rubel monetary assets inside the country, which I could totally believe to be true.
- bfz 5y agoInterest rate increases, selling reserves, RUB sales bans, demanding customers pay for energy in RUB, demanding local businesses sell non-RUB reserves, banning foreign sales of Russian assets The rate may look similar, but it is against a backdrop of a significantly different and far worse economic environment, not least the use of reserves to prop the currency will have depleted their reserves.
- nicbou 4y agoThis is exactly the same playbook that the ministry of finance followed when Nazi Germany went the autocratic route. They also confiscated personal stores of foreign currency, and eventually pulled the sort of financial wizardry that I'm unqualified to explain. Adam Tooze's Wages of Destruction is an incredible book if you're into economics. If I learned one thing from this book, it's that central banks have a lot of tricks up their sleeves if the situation demands it.
- eimrine 5y agoThe more interesting question is why Hryvnya is so stable despite the prices is rocketing up (except of some goods which has layed too long on warehouses) and you even can buy dollars on 34 UAH per USD (on today's black market).
- ushakov 5y agoas far as i understand it they just keep buying stocks and keep buying Ruble obviously this can’t go in forever and this is just a crutch
- asplake 5y agoThe Economist (I’m a subscriber) did a podcast on this recently. Lots of measures, but bottom line it is not a convertible currency. The published rate is a bit of a fiction.
- IshKebab 5y agoI don't see how that can really work unless the published rate isn't the actual market rate which would be ridiculous.
- rich_sasha 5y agoEasy. Try buying and selling at this rate. It’s a hugely constrained market. I can tell you I have an asset worth 1e12 dollars but no one can buy it or sell it. This is kind of the same.
- IshKebab 5y agoOk but is the market rate not derived from the prices that people actually are buying and selling at? If not that's kind of insane.
- rich_sasha 5y agoThat’s my point, there isn’t really a free market for rubles. It’s so tightly controlled by the Russian state, they might as well name a price.
- deepsun 4y agoExactly, what their govt called "market rate". Similarly, I remember at one point there was almost 0 cases of COVID positives officially. But a huge spike in respiratory problems or other causes deaths for some reason.
- marbu 5y agoThis seems to be going towards the system which soviet union used. The official rate is an illusion created by the government while actual market exchange is basically illegal: The Soviet Union officially valued the ruble in the planned economy at an average of 0.74 руб per USD ... However, as the ruble was not internationally exchangeable and as Soviet citizens could not legally own foreign currency, rubles changed hands in the black market at an average of 4.14 руб per dollar in the same period https://en.wikipedia.org/wiki/Soviet_ruble#Exchange_rates https://en.wikipedia.org/wiki/Soviet_ruble#Exchange_rates
- ximonx 5y ago[dead]
- oblio 5y agoFor now. And it's stuff like this that will probably lead to most cryptocurrencies being banned in developed countries. At this point they turn into national security risks and nothing survives a head on collision with the military-industrial complex.
- pjc50 5y agohttps://newrepublic.com/article/156788/zero-hedge-russian-trojan-horse https://newrepublic.com/article/156788/zero-hedge-russian-tr...
- InfiniteRand 5y agoThe Economist has an interesting take on this https://www.economist.com/graphic-detail/2022/03/31/why-is-the-rouble-so-resilient https://www.economist.com/graphic-detail/2022/03/31/why-is-t... Behind a paywall but if you turn JavaScript off you can read it for free
- wellthatsawrap 5y agoDoesn't make sense does it? Lies usually don't. The truth does make sense, but they don't want you to hear it. https://tomluongo.me/2022/03/28/got-gold-rubles-russia-just-broke-the-back-of-the-west/ https://tomluongo.me/2022/03/28/got-gold-rubles-russia-just-...
- stavros 5y agoI tried to read that but couldn't get over the conspiracy-theory-sounding language.
- macinjosh 5y agoWhat are you even talking about?
- stavros 5y agoNo yeah, "But, whatever, Neocons never met an ugly stick that they didn’t want to use to beat someone over the head with. Too bad all they’re doing is hitting a rubber tire." sounds like the least biased sentence ever.
- smegsicle 4y agoit's not a conspiracy, neocons are widely known to be war hawks- or are you asserting that 'neocon' is an unreasonable characterization?
- 8b16380d 5y ago“Other side bad”
- ascendantlogic 5y agoAh yes, the shadowy, nebulous "they" that are suppressing the "real truth". Not surprising the linked post reads with a serious undercurrent of conspiracy theory.
- pjc50 5y agoRussian exports have been badly dented, but some oil and gas remains. Russian imports have been completely wrecked. Effectively the sanctions have _improved_ their balance of payments. They have some money, but nobody will sell to them. Slightly different situation from their money being worthless because they're outspending their ability to earn hard currency.
- Mountain_Skies 5y ago>but nobody will sell to them. The self anointed "international community" is only a very small fraction of the actual world. This is typical western hubris and arrogance thinking that everyone will blindly follow them and those who don't, will powerlessly suffer the consequences of the wrath of the west. Russia has money, the world loves money, the world will sell to Russia. Not only that, but there's no shortage of western corporations busy trying to find ways to covertly sell to Russia because that's what they've done to every other pariah state. Russia will incur higher costs to acquire the things it wants but it will still be able to get them and it will often be western companies covertly doing the selling.
- pjc50 5y agoThis is unfortunately true. https://ukrainetoday.org/2022/04/23/exclusive-france-and-germany-evaded-arms-embargo-to-sell-weapons-to-russia https://ukrainetoday.org/2022/04/23/exclusive-france-and-ger...
- Markoff 5y agoyup, international community = less than 1/4 of countries on this planet judging by Western MSM you see here in Europe you would think everyone in world sanctioned evil Russia while opposite is true
- kaba0 5y agoMaybe look at the relative size of the countries’ respective economies. Whether French Guiana sanctions Russia doesn’t matter nearly as much as e.g. the European Union doing so.
- roenxi 5y agoThe value of a currency isn't exactly decided by what it is worth to Americans. Russia still has everything they had before the war, which is still as intrinsically valuable as ever & they are still willing to trade. They haven't changed their regulatory environment in crazy ways and haven't suffered major hits to their productive capacity. In some senses, it is difficult to see why a sanctions attack against Russia would damage their currency that much. The fundamentals are still much the same. I still bought US products after Iraq and I'd still buy Russian products after Ukraine. I imagine most of the world feels similar. There are even some hints that parts of Europe feel that way. Although, because I'm something of a gold bug, there are some unreliable claims they've re-introduced the gold standard (https://theconversation.com/why-russia-has-put-the-rouble-on-a-gold-standard-but-its-unlikely-to-last-180632 https://theconversation.com/why-russia-has-put-the-rouble-on...). That is an interesting thing that happened on the way through.
- pjc50 5y ago> I'd still buy Russian products after Ukraine Good to announce your cheerful complicity in mass murder on here so we know not to take you seriously.
- cassianoleal 5y agoIt's also stated here: > I still bought US products after Iraq Which I suspect is true for yourself as well, although I have no means to verify it. It is true for most of the world though. Let's look at all the other mass murders committed by the US and their allies and stop buying goods from them too, shall we? And before the "whataboutism" flame war starts, I don't care. It's not whataboutism when you're specifically stating (implicitly or otherwise) that one is fine and the other is not.
- Mountain_Skies 5y agoYou never buy anything from China?
- cryo 5y ago
- trentearl 5y agoIt didnt stabilize, only an illusion. The government introduced strict currency controls forcing business to hold rubles. Also foreign stock holders are not allowed to sell stocks and covert to dollars. The price listed isnt real because the market isnt real, I imagine buying an iphone in Moscow right now would cost much more than the rate would lead you to believe.
- rich_sasha 5y agoThats exactly right. Who is buying and selling roubles? Yes, there are apparently some transactions, since there is a price, but it’s hardly a market controlled by supply-demand. Russian exports have always been priced in USD or other foreign currencies; Russian companies don’t want to get roubles, it seems. Similarly, with imports, companies probably need to pay in whatever non-rouble way possible, I can’t imagine any serious exporter would take roubles. Companies receiving foreign currency are forced to exchange them immediately to roubles according to a central bank’s rate. It’s a theatre, not a market, and so the price is mostly anything.
- H8crilA 5y ago20% interest rates. Yes, just raising rates to a high enough level is enough. This is macroeconomic policy 101. It will seriously deflate the Russian economy, recent World Bank projections are for a -11% GDP drop (Ukraine: -40% drop). That's a very severe recession. You can always defend a currency at the expense of jobs, it was done in the US too, by Paul Volcker.
- gregwebs 5y agoEven with this internet rate they are experiencing elevated inflation. The ruble may be stable, but these conditions of high interest and capital controls are expected to severely damage the economy if they are maintained.
- H8crilA 5y agoPoint is, if you raise them high enough and keep them there for long enough you can disarm any inflation and any currency depreciation, at the expense of economic throughput. And so that's what they did: https://tradingeconomics.com/russia/interest-rate https://tradingeconomics.com/russia/interest-rate It's macroeconomic policy 101, tested many times throughout history in various countries, both positively (when you do this then inflation/depreciation stops) and negatively (when you don't do this then inflation/depreciation continues). There are many unanswered question in macroeconomics, but this isn't one of them.
- jupp0r 5y agoSupply and demand. 1. Capital controls. Russians are legally not allowed to sell their Rubles anymore. This decreases supply and keeps prices up. 2. A healthy dose of foreign currency ($1B/day from Germany alone) gives the Russian central bank plenty of tools to buy Rubles and increase demand for it to keep prices up. This does not mean that the existing sanctions aren’t working. Eventually Russian factories will run out of machine spare parts and everything will grind to a halt, people will use their jobs, demand for goods will decrease, other factories will have to close due to lack of demand for their goods, their workers get laid off - you get the idea. This takes time though. Disclaimer: I’m not an economist, but I do have a subscription to the Economist :)
- native_samples 4y ago> Eventually Russian factories will run out of machine spare parts and everything will grind to a halt Probably not. The Russian economy is unusually self-reliant, a legacy of Soviet times. It's pretty common to discover that for some niche weird thing there are only a handful of manufacturers in the world and one of them is Russian. For example: one reason it's hard to build nuclear reactors is that the containment hull has to be made of a special kind of steel that you can only buy from two companies in the world. One is Japanese, the other Russian. In particular their military is unusually self reliant. That's why they're famous for weapons exports rather than imports. > I do have a subscription to the Economist The Economist was pretty consistently writing deranged propaganda about Russia even 5 years ago so I really doubt you're getting accurate information from it now.
- deleted 4y ago[deleted]
- emteycz 4y agoI still have few "made in CCCP" things at home. All of them were unbelievably shit compared to their western not-competition at the time of manufacture. Especially computers, while the west already had Windows and internet and 3.5" floppies, 8bits with tapes were just getting started here - and of course it all was a copy of western designs. And most of it was made outside Russia anyways - e. g. they used Czechoslovak factories a lot because the quality was and is like from another dimension; our army refused Soviet tanks because of the shit quality and instead made our own based on the same design. That was when they were "self-reliant" for decades. After the fall, they switched to globalized manufacturing completely. And now you're saying they will be able to switch back in months, with much worse economy and nobody willing to help them? I'm laughing very loudly.
- NicoJuicy 5y agoRussia used their funds to prop up the Ruble, so it's massively inflated right now. We'll know when the funds run out, it's a expensive task to keep it inflated.
- logifail 5y ago> "One of the most frequent lines heard in Washington is that Russia is now globally isolated — with China being the key prevaricator. America risks being seduced by its own public relations. The world’s reaction to Russia’s invasion of Ukraine is far more complex than that. Since February 24, the west has been galvanised into showing more unity than it has in years. Yet most of the world is on the sidelines waiting to see which way it goes. Not for the first time, the west is mistaking its own unity for a global consensus" [0] [0] https://www.ft.com/content/d7baedc7-c3b2-4fa4-b8fc-6a634bea7f4d https://www.ft.com/content/d7baedc7-c3b2-4fa4-b8fc-6a634bea7...
- stackbuffer 5y agoRussia is backing it up with Gold. Gold is accepted everywhere in the world, this makes the Ruble stable. Edit: Watch this video for more info: https://www.youtube.com/watch?v=6SjvimH42po https://www.youtube.com/watch?v=6SjvimH42po
- teleforce 5y agoThanks for the video link, I think gold is the most plausible explanation why Russian currency is still stable albeit plunging in the initial stage of the war. Iran has been doing it for a long time, and even selling their oil and gas using gold not US dollars [1]. [1]Turkish-Iranian gold trader's ‘Beautiful Mind’ testimony drove U.S. sanctions case: https://finance.yahoo.com/news/gas-gold-turkey-iran-scheme-explained-151517687.html https://finance.yahoo.com/news/gas-gold-turkey-iran-scheme-e...
- qilo 5y agoOfficial exchange rate is a useless measure, it doesn't mean anything (what's the exchange rate of a toilet paper?). However, real (black market) exchange rate is way worse than before the invasion.
- kkfx 5y agoMy suggestion is reading one/some Antony Sutton books, simply to visualize a bit the fact that money is not anymore and since decades and decades a shared unit of measure of nearly anything being instead a virtual substrate of nearly anything under private control. With that in mind you can metabolize the fact that the actual dollar hegemony is at the end because it's tangible value is less and less accepted. Russia, and perhaps even more China, simply have done without saying a new Bretton Wood where instead of electing a currency the one for anything, a currency based on thin air, handled by a private cleptocratic company remaining in power thanks to propaganda and the army power, they propose one based on something tangible like natural resources and industrial power. Other countries have started to join (like Saudi Arabia, Israel and partially EU so far, the first two accepting renmimbi for oilm tge last for accepting paying Russian gas in rubles) and others "ante litteram" have already tested that and was crushed (like Saddam's Iraq with oil in euros vs dollar, just before Iraqi invasion by the USA or Qaddafi's Libya against the Paris controlled CFA designing a new local pan-African currency). In the past the west have had the biggest world power in tech, industry, military, science etc than all those start to wane crushed by an economically-driven society. EU lost its place from WWI, USA gain back than and thanks to WWII establish a global power but now de-industrialization, new cyclic big crisis typical of all neoliberals models, with no one left to invade and steal big resources, internal populations reactions (strikes, social unrest, scandals etc) and the growth of big enough superpower, one industrial (China) and one in natural resources terms (Russia) have made the change. Neoliberals need a war to remain in power but they lost such war even before it's start. So countries with neoliberals dominance and their currencies (dollar, sterling and euro) decline while new affirming powers rise. Not that much just because China have an extremely deep food problem: they can't nourish it's own people and their industrial system is still to lean toward export for the west, Russia have natural resources, but it's not anymore Soviet Union, it's economy is in a terrible shape and the need of China for mass production is a big vulnerability. But still enough to make the ruble rise and stabilize. EU have admitted, while informally/in actions not words, that no solution exists to makes a real embargo on Russian resources, we have started to buy gas in ruble [1] oil is still exchanged [2] with tricks, we still need aluminum, palladium, titanium, ... from Russia etc. Nothing can be done quickly and effectively. Neoliberals have clearly pictured how powerless they are [3] like believers who say "to solve any issue we pry the god of the market that by market magic it will solve our crisis". So Russia know well that like the Korean war no compact front will exists against them. USA know fully well they haven't anymore an industrial complex sufficient to get rid of China quickly and UK know fully well they do not have anymore an empire, they can just hope for USA help in exchange of Commonwealth natural resources witch aren't really much under UK control anymore. On the other side the above described issues impede a quick win so we are there faltering a bit. The first winner anyway is China: they get Russia, so the biggest reservoir of natural resources and probably high tech Russians military tech they equally need. USA have re-win EU, at least until EU Citizens will revolt against our corrupted government that act against our interest for some third party that prove countless time being no friend of us. So they are the II winner. Others are just looser. Many new movement will happen for India, the Gulf, Iran, Myanmar etc that will surely try to earn something in the game and while "marginal" just by their size and resources they are contended and contenders. That's is. The Rand idea to weaken Russia [4] works at a so high price that dollar can't win. The actual WWIII will probably see no real winner, but probably the least looser will be eastern-shifted and currencies start to reflect that a bit. [1] https://www.helsinkitimes.fi/world-int/21419-european-commission-says-companies-allowed-to-pay-for-russian-gas-under-new-scheme.html https://www.helsinkitimes.fi/world-int/21419-european-commis... [2] https://mishtalk.com/economics/how-russia-avoids-oil-sanctions-transfer-at-sea-to-destination-unknown https://mishtalk.com/economics/how-russia-avoids-oil-sanctio... [3] https://voxeu.org/article/how-solve-europe-s-russian-gas-conundrum-tariff https://voxeu.org/article/how-solve-europe-s-russian-gas-con... [4] https://www.rand.org/content/dam/rand/pubs/research_briefs/RB10000/RB10014/RAND_RB10014.pdf https://www.rand.org/content/dam/rand/pubs/research_briefs/R...
- spaceheater 5y agoI am in Russia right now. Since 18 April it is possible to buy USD, although current rate is slightly higher 77 (Google) vs 86 (that is from an actual local exchange office, not a bank, you can walk in and buy). Since the whole world seems to hate Russians right now, I guess no point buying USD and traveling somewhere. I keep hearing stories how "in just a few months" everything is going to collapse and people will be starving. I doubt it, it's been two months, feels the same so far.
- ShivShankaran 5y ago
- russiano 4y ago> do you feel that the Russians have started to detest "West" more? It's certainly true for me and a few more people that I know. I used to be a cookie-cutter west-loving liberal, and now I'm slowly turning into a bitter vatnik. One of the things that made me change my mind (aside from diving deep into the history of the conflict after which many things started to make sense) is seeing how petty and ridiculous sanctions could be. Ironically, those people who embraced the western values have suffered the most, not only financially, but morally too, seeing how every day new sanctions pushing them towards the world's pariah status. For the average Putin voter nothing has changed really (except McD, that was harsh) - financial instututions work just fine and we are not going to suffer from food or fuel shortages I still think Putin is a bloody dictator and that the war is a historical mistake and a catastrophe. However, seeing rabid mccartism and imposing collective guilt only makes me feel under siege. And the natural response is to stick to the leader, no matter how bad he is I don't even want to start on the hypocrisy, this rant would go well beyond HN's allowed comment length
- orochi235 4y agoWhat's the alternative, though? The leader of your country is terrorizing Europe in ways not seen in almost 80 years. We all know all-out war between nuclear states is not an option, so what should Western nations do? Just sit back and ignore the indiscriminate war crimes? It's ironic to me, given how clearly Putin's worldview presumes that power is all matters, how quick Russia has been to cry foul over sanctions. If you want to live in a world where the one with the biggest stick gets to do whatever he wants to everybody else, you should probably at least make sure you have a big stick first. I'm sorry that your local McDonald's closed, and I do have some sympathy for the Russian people, most of whom probably wanted nothing to do with this war. I have an enormous amount of sympathy for those brave enough to speak up in the face of frankly terrifying state oppression. But honestly, after enabling that maniac for 22 years, I do think Russian citizens bear a little bit of responsibility for this senseless war (not to mention all the other ones!). And if you think that's unfair, well, how about what's happening to the citizens of Ukraine? Is that fair? It's in everyone's interest that we all learn to get along. Nobody wants the Russian people to suffer for no reason. I hope you guys eventually figure out how to stand up an honest and functioning democracy, for your sake as well as everyone else's. But we can't condone this senseless brutality, and if that makes you see us as your enemy, that's unfortunate, but hopefully temporary.
- AlbertoGP 5y agoAlex Christoforou and Alexander Mercouris (happens to be nephew of Melina Mercouri) have a detailed discussion on this, I recommend starting at 3′22″: > We said it right back in February, that it was economic “shock and awe” [https://en.wikipedia.org/wiki/Shock_and_awe https://en.wikipedia.org/wiki/Shock_and_awe], financial “shock and awe”, you sieze the assets of the Central Bank (at least half of them), you sanction the Central Bank so that they can’t operate with contacts with other Central Banks. > The expectation was, and this is indisputable, because the briefing notes are all there, they’re still up there on the White House website, that that would mean that the Central Bank would not be able to support the Ruble, the Ruble would then go into freefall, that was what was said, Biden subsequently talked about it, you know, the Ruble becoming rubble, 200 Rubles to the Dollar, all that sort of thing, and of course it did not turn out that way at all. > And the reason it did not turn out that way at all, is because Nabiullina [https://en.wikipedia.org/wiki/Elvira_Nabiullina https://en.wikipedia.org/wiki/Elvira_Nabiullina] did her job as governor of the Central Bank, and prevented it from happening. > She raised interest rates, I know this is controversial with some people, but I think as an emergency reaction that was absolutely the correct thing to do, she provided the necessary liquidity to the financial system, she made sure that the financial system was operating properly, and she held it all together. And she proved herself to be, this year, an extremely effective financial crisis manager. > So we have a very stable situation with the Ruble. In fact, the problem with the Ruble at the moment is that the Ruble shows signs of appreciating too quickly. There is a massive amount of cash, of foreign currency swishing around the Russian economy, as Euros and Dollars pour into Russia from Russian energy sales. > The Russians are prevented now from importing many goods, and of course they are afraid to take this money out and put it in foreign accounts because if they do, it could easily be stolen. So all of this money is piling up in Russia, and there are comments, some members of the government are saying, you know, we should convert it all into Rubles, others are saying, if we convert it all into Rubles that would make the Ruble too strong, it could go to 50, 60 Rubles to the Dollar, and that would not be good for the underlaying competitiveness of our economy. > [...] and of course the other problem she has is that because of the massive, orchestrated pull-out of Western companies from Russia there are now gaps appearing in the Russian consumer market, there are problems in supply chains for Russian companies, and that is causing a fall in production. And that in turn, is leading into higher inflation within Russia itself. https://www.youtube.com/watch?v=GgTcha5-Pj0&t=202s https://www.youtube.com/watch?v=GgTcha5-Pj0&t=202s Alternative: https://rumble.com/v11paoj-nabiullina-and-putin-discuss-the-russian-economy-and-failed-blitzkrieg.html https://rumble.com/v11paoj-nabiullina-and-putin-discuss-the-...
- gutitout 5y agoI’m surprised I haven’t seen the right answers here yet, so I will chime in. 1. Russia produces 12% of the world's oil and has a similar share of global oil exports. [0] Those purchases are now being made in Rubels.[1] This was a direct retaliation to the USA and European sanction efforts. Before this oil was universally exchanged in USD or EUR. This has helped prop up the Rubel. 2. Russia moving back to a gold standard. [2] This is the single most interesting economic move in my opinion. Russia is continuing to buy more of the worlds gold supply. The Rubel is going to be pinned to the Gold standard. This makes the Rubel incredibly attractive as it can be a stable currency and easier to purchase than Gold itself. My personal feeling (contrary to most comments here) is that the sanctions have a terrible effect on the USA and Europe and have contributed to a world where China, India and Russia will be working to destabilize the USD and its allies. Moving away from the petrodollar, SWIFT and other USD centric methods is a very negative proposition for those of us who live in the west. 0. https://en.m.wikipedia.org/wiki/Petroleum_industry_in_Russia https://en.m.wikipedia.org/wiki/Petroleum_industry_in_Russia 1. https://www.nytimes.com/2022/03/23/business/putin-russian-oi https://www.nytimes.com/2022/03/23/business/putin-russian-oi... 2. https://seekingalpha.com/amp/article/4498704-russias-3-step- https://seekingalpha.com/amp/article/4498704-russias-3-step-... Edit: Spelling
- popilewiz 5y agoThose payments are not being made in roubles yet, most western countries have declined to make them directly. Instead Russia is offering them to open bank accounts in Russia where they could deposit euros or dollars, which then are converted into roubles. The rouble is currently propped up by the dwindling currency reserves of the central bank and by the fact that you can't buy $/€/£ anywhere as a private citizen. The banks are out for the most part, the exchanges work with a giant commission and the supply of cash is just not there. You can exchange it virtually, but the rate is about 30% worse than the one advertised by the CB. This can't go on for much longer.
- arroz 5y agoThis answer is wrong from what I read Not all countries are buying oil and gas in rubble, just the ones russia considers “unfriendly”. But even from those, russia isnt enforcing it. Germany has said it wouldn’t pay in ruble. US doesn’t buy anything from Russia. Hungary is paying in ruble. By paying in ruble they create an artificial demand for the currency, making it worth more. However Russian government can make the same thing with the euro / dollars they receive from oil / gas purchase. The only reason they asked others pay in ruble is so they don’t have to do the conversion themselves because you know, with all the sanctions it is a pain to do it. The price spikes in Russia didn’t go back after the currency stabilized, so regular Russians are still screwed I’ve never seen anything about the gold standard thing, but even if it is true 1- gold price is also volatile and 2- there is a reason people moved away from gold standard
- HWR_14 5y agoThe Russian government has done a couple of things to dramatically decrease the demand on the ruble -> hard currency conversion. If you own Russian bonds or stocks outside of Russia, you used to get paid in hard currency. You now get paid in rubles. So suddenly the government and major companies no longer need hard currencies. Individual citizens can no longer convert rubles to hard currency. So, a lot less demand. Meanwhile, the Russian government still has hard currency reserves and gas/oil they can use to buy rubles. Since someone still wants to buy rubles, and there isn't a group that needs/wants/is allowed to sell them, the price is going up.
- snowwrestler 5y agoNobody inside Russia can sell rubles and no one outside Russia wants to buy rubles. How can you value something that is not transacting? The published “worth” of the ruble seems like a fiction.
- telchar 5y agoKrugman looked this a few weeks ago: https://www.nytimes.com/2022/04/01/opinion/russia-ruble-economy.html https://www.nytimes.com/2022/04/01/opinion/russia-ruble-econ... tl;dr: Russia is propping up the Ruble with all the means at their disposal
- netsharc 4y agoExtra tidbit: the number (exchange rate) is a visible marker of "The Western world is against us", and it's very hard to preach "Everything is fine" when that number is massively worse compared to before the war; so they're destroying the future of the economy just to make sure it looks right currently.
- 8b16380d 5y agoCould be the western powers actually don’t have as much global influence as they once had. China, India, Turkey and Israel (along with a host of others) have no problem interacting with russia economically. The recent crash was just another opportunity to make some money and buy the dip.
- baxuz 5y agoNicely covered in Adam Something's latest video, "Who's Winning the War for Ukraine?": https://youtu.be/IpIWswLYAbA https://youtu.be/IpIWswLYAbA
- bartimus 5y ago20% interest rate (now 17%).
- powerapple 4y agoAs long as you can export 1) energy, 2) food, 3) weapons, you will be okay anyway. What's the real value of ruble anyway? Did Russia just shrunk to 50% of its size? It is all manipulations.
- exabrial 4y agoThere's no doubt extensive manipulation, but don't forget the EU is still buying ""essential"" gas and other petrochemicals from Russia. Grow a pair: Lift the ban on domestic exploration. Open the floodgates from other countries. People's are dying over cheap gas.
- brokensegue 4y agoIt would take a long time to dramatically increase petroleum production. Doesn't seem relevant to the crisis. And long term we want to reduce fossil fuel production.
- exabrial 4y agoDon't forget, most petroleum markets are driven on speculation. In my anger with my og comment I didn't consider the EU, especially Germany's, market might not be.
- postalrat 4y agoAnd face mass layoffs, shutdowns, etc in europe?
- tsol 4y agoIsn't the reasoning for this whole thing humanitarian? That's why it's okay that many poor Russians will starve if the economy is successfully damaged. Seems losing a few jobs is worth saving lives