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Meanwhile, the Ruble is up from where it was just before the invasion. There is a sudden drop off during the month following the invasion in late Feb when sanct

by cronix 4y ago

Meanwhile, the Ruble is up from where it was just before the invasion. There is a sudden drop off during the month following the invasion in late Feb when sanctions were applied, but risen since then. It's currently sitting at a 5 year high. https://www.xe.com/currencycharts/?from=RUB&to=EUR&view=5Y https://www.xe.com/currencycharts/?from=RUB&to=EUR&view=5Y

AnotherGoodName 4y ago
Looks like their foreign exchange reserves are dropping though. https://tradingeconomics.com/russia/foreign-exchange-reserves https://tradingeconomics.com/russia/foreign-exchange-reserve... So not sustainable. They are selling foreign currencies to keep the ruble alive.
- hauget 4y ago
  How does this compare to foreign exchange reserves of other countries like the US & China?
  - gumby 4y ago
    Don't think of the US as having foreign exchange reserves. Other countries have foreign exchange reserves, basically all in US dollar-denominated instruments.
    - colineartheta 4y ago
      This is misleading if not outright wrong [1][2]. The United States absolutely has foreign reserves, and nearly all countries hold foreign reserves that aren’t solely “basically all in US denominated instruments”. Nor can one just wish away the fact that the USD isn’t the only strong currency in the world, nor the only asset foreign countries hold; diversification doesn’t only apply to individuals. 1. https://www.federalreserve.gov/data/intlsumm/current.htm https://www.federalreserve.gov/data/intlsumm/current.htm 2. https://home.treasury.gov/data/us-international-reserve-position https://home.treasury.gov/data/us-international-reserve-posi...
- simonh 4y ago
  It's not sustainable in the long term, but that term is actually quite long. This isn't going to be a short or medium term crisis. It's going to take years, and a lot of consistent political will. I hope we're up to it.
  - arinlen 4y ago
    > It's not sustainable in the long term, but that term is actually quite long. I'm not so sure about that. There were a bunch of news outlets warning that Gazprom is on the brink of a massive default. Gazprom, of all companies. If the company that subsidizes Russia's ruling regime can't make their payments in spite of sitting on a huge pile of oil and gas, that does not bode well for Russia's economy.
    - deleted 4y ago
      [deleted]
    - YarickR2 4y ago
      That bunch of news outlets was/is feeding their clients bullshit
      - thelittleone 4y ago
        Can share some sources for this? Genuinely curious.
    - dmatech 4y ago
      A default that is only due to sanctions preventing repayment of debts isn't really a meaningful default.
      - simonh 4y ago
        In some ways yes, but in practical terms it means they’re locked out of the credit markets and are going to have huge difficulty paying international suppliers. Even the ones willing to deal with them despite sanctions.
- chrisco255 4y ago
  Is the Euro or the Yen sustainable at this point? BOJ has a standing policy to buy unlimited JGBs. How sustainable is that?
  - pyrale 4y ago
    JGBs being owned mostly domestically, that particular country's currency is probably not at risk unless big japanese institutions decide to close shop and retire abroad. As for the Euro, it's currently at a 20-year low, if that's an answer to you. Since the balance of payment is positive, there's probably no reason to be pessimistic in the long term.
    - chrisco255 4y ago
      > As for the Euro, it's currently at a 20-year low The Yen is at a 24 year low vs USD. The Yen is down 15.9% YTD. That is just an incredibly fast erosion and we're only halfway through the year.
      - pyrale 4y ago
        > we're only halfway through the year. Is there a yearly pendulum that I'm not aware of? Because if not, we've also only 21% through the century, and we've barely scratched the millenium.
- ak_111 4y ago
  Why isn't that already reflected in the price? Surely FX traders (who are mostly very large institutional investors) have already factored this into their models since it seems a very important factor?
  - uoaei 4y ago
    It is an important factor, just not yet.
  - austhrow743 4y ago
    Why the assumption that it’s not reflected in the price?
    - guerrilla 4y ago
      That's what they meant. Read the second sentence of the comment.
  - RandomLensman 4y ago
    RUB is a tiny market in FX and probably not many touching it due to current risk surface. Very large institutional investors are usually not big FX speculators anyway outside of exposure from their assets. FX tends to be a bit more fast money.
  - deleted 4y ago
    [deleted]
- O__________O 4y ago
  Russia still has 2301.64 Tonnes of gold: https://tradingeconomics.com/russia/gold-reserves https://tradingeconomics.com/russia/gold-reserves Or roughly $128.9 billion USD in gold reserves: https://www.wolframalpha.com/input?i=2301.64+Tonnes+of+gold+to+usd https://www.wolframalpha.com/input?i=2301.64+Tonnes+of+gold+...
  - hef19898 4y ago
    But how many bitcoin and stable coins do they have?
    - O__________O 4y ago
      Russians, not Russia, according to this article from early Feb-2022 have $214 billion in crypto assets based on IP address analysis: https://m.timesofindia.com/business/cryptocurrency/blockchain/russians-own-12-of-the-worlds-crypto-assets/amp_articleshow/89342468.cms https://m.timesofindia.com/business/cryptocurrency/blockchai...
  - Armisael16 4y ago
    What’s Russia going to do with that gold? Put it on a train a quarter of the way around the world to Beijing? It is far from trivial to move that kind of stock.
    - O__________O 4y ago
      Correct, though there is a huge demand for gold currently. Russia was buying 150 tonnes a year from 2008-2020; annual global demand is 4,000 metric tons. Even without selling it or shipping it, they could likely use it to secure debts to China example.
abirch 4y ago
The ruble is artificially up https://www.npr.org/2022/07/07/1110354162/the-artificial-strength-of-the-russian-ruble https://www.npr.org/2022/07/07/1110354162/the-artificial-str...
- dannyw 4y ago
  Hardly. As mentioned in the podcast, the emergency measures are more or less gone, and the Ruble is still staying strong. And raising interest rates to increase the strength of your currency is exactly what central banks can and should do. There is so much propaganda and "Russia-bad" going around in the media, whether you think it's deserved or not is irrelevant to the quality of journalism taking an extreme nosedive. Elvira Nabiullina (Russia central bank chair) is IMHO one of the smartest central bankers in the world right now. Much better than "transitory" Powell.
  - outside1234 4y ago
    There is a lot of "Russia is bad" evidence in shelled out cities and dead Ukrainians. They certainly earned this one!
  - gumby 4y ago
    > Elvira Nabiullina (Russia central bank chair) is IMHO one of the smartest central bankers in the world right now. Much better than "transitory" Powell. She tried to quit at the end of February but was not permitted to.
    - cuteboy19 4y ago
      There is a Soviet joke hidden in this somewhere I feel we just have to find it.
    - trhway 4y ago
      as siblings noted about Soviet joke - in today's Russia you don't quit your job, your job quits you. Actually it isn't that much of a joke today - according to the new wartime law Russian government can compel any business to produce the amount of product/service the government wants with the business having no right to refuse, and the government can force people to work overtime, weekends, holidays with the government defining what payment, if any, to happen to the business and the people.
trhway 4y ago
>Ruble is up from where it was just before the invasion. The prices in Russia reflect about 1.5-2x ruble fall against dollar since the invasion. The official ruble/dollar ratio is maintained by draconian measures/restrictions against exporters and population (plus significant depression of economy which was consuming a lot of imports, like the car market falling 6 times because most of the foreign car makers/traders are gone, similar situation in IT for example, ie. Russian economy collapsed to becoming only natural gas and oil pump). Very similar to the situation back in USSR when dollar was only 0.63 of ruble, yet it wasn't possible to buy any dollars at that price. Wrt. original post - it was obvious even back in February that the faster Ukraine wins the less hit Europe will take. Europe has been dragging its feet on military help for Ukraine and as a result dragging itself deeper an deeper into an economical crisis. Leaders of France, Germany, Italy still seem to hope that Russia will take a piece of Ukraine, and after that the things will be back to the good old times. This naïve thinking has already obviously failed, yet they are still clinging to it.
- harambae 4y ago
  There's usually a black market rate in that case. And.. it appears there is here too [0], but at least in May it wasn't as wildly far off as typical when the government starts fixing the exchange rate. Only 15-20% difference. [0] https://www.bloomberg.com/news/articles/2022-05-17/in-ussr-flashback-russians-are-hunting-for-black-market-dollars https://www.bloomberg.com/news/articles/2022-05-17/in-ussr-f...
SergeAx 4y ago
This is artificial. Import is very low due to sanctions, export is quite high due to energy price hike, so there's a lot of foreign currency sitting idle inside the country, and exporters should pay their expenses and taxes, so they have to sell at whatever price market is ready to buy. I actually banked on that a bit, enough to offset losses on other parts of my portfolio.
qaq 4y ago
Russia is in tough spot with this situation inflation is high if they drop the rubble it will get crazy high if they don't drop it they can't make the budget work.
cheriot 4y ago
Is there a way to look at volume of EUR/RUB exchange?
rndmind 4y ago
Are you arguing that the ruble is more stable place to store your money than the Euro?
- hef19898 4y ago
  Obviously the most stable plave is some non-fiat crypto-stable-coin thingy or other. /s
arinlen 4y ago
> Meanwhile, the Ruble is up from where it was just before the invasion. A massive economic sanctions package, which eliminates their ability to import goods and services while having their sole export stockpile foreign currencies, does help level the balance of trade. But that does not mean the economy is not tanking though.
throwaway290 4y ago
Whom can you sell rubble for euro at that price? No ordinary person that I know of could do it in Russia or outside last time I checked. Outside of Russia, nobody will take your ruble. In Russia, somebody may, but that's not going to be a bank and the actual cost will be much steeper than advertised rate. (US dollar skyrocketed to almost 100 ruble in March until Russian government decreed its officially worth 60 except now you basically can't legally buy western currency. HODL mode I guess?)
fny 4y ago
The price isn't what you think it means. I say this only because I have a sizable amount of rubles from an earlier trade, and *I have no way to exchange them for USD despite the exchange rate.* The price you see is a reflection of the price accepted by those able and willing to trade rubles which is currently *a limited subset of the world*. Sure, they have a massive trade surplus due to the commodity shortage, but a lot of the move is engineered through capital controls. (1) Western Ruble electronic trading is dead. It's near impossible to move rubles with any size. [https://www.risk.net/our-take/7946561/russian-ruble-trading-steps-back-in-time https://www.risk.net/our-take/7946561/russian-ruble-trading-...] (2) Moscow is forcing companies to buy rubles. (3) Moscow limited the amount of dollars that Russians could withdraw from foreign-currency bank accounts and barred banks from selling foreign currencies to customers. [https://www.wsj.com/articles/russias-economy-is-tankingbut-the-ruble-is-soaring-11653559916 https://www.wsj.com/articles/russias-economy-is-tankingbut-t...] (4) Moscow has fixed the price of gold. [https://www.kitco.com/news/2022-03-28/Russia-sets-fixed-gold-price-as-it-restarts-official-bullion-purchases.html https://www.kitco.com/news/2022-03-28/Russia-sets-fixed-gold...] So really, the "appreciation" you see is compensating you for the headache you'll have to go through to do anything meaningful with rubles. Meanwhile, Russian inflation is at 15% and GDP is collapsing. Russian imports have collapsed because *no one really wants rubles*.

by cronix 4y ago

AnotherGoodName 4y ago

Looks like their foreign exchange reserves are dropping though. https://tradingeconomics.com/russia/foreign-exchange-reserves https://tradingeconomics.com/russia/foreign-exchange-reserve... So not sustainable. They are selling foreign currencies to keep the ruble alive.

hauget 4y ago
How does this compare to foreign exchange reserves of other countries like the US & China?
- gumby 4y ago
  Don't think of the US as having foreign exchange reserves. Other countries have foreign exchange reserves, basically all in US dollar-denominated instruments.
  - colineartheta 4y ago
    This is misleading if not outright wrong [1][2]. The United States absolutely has foreign reserves, and nearly all countries hold foreign reserves that aren’t solely “basically all in US denominated instruments”. Nor can one just wish away the fact that the USD isn’t the only strong currency in the world, nor the only asset foreign countries hold; diversification doesn’t only apply to individuals. 1. https://www.federalreserve.gov/data/intlsumm/current.htm https://www.federalreserve.gov/data/intlsumm/current.htm 2. https://home.treasury.gov/data/us-international-reserve-position https://home.treasury.gov/data/us-international-reserve-posi...
simonh 4y ago
It's not sustainable in the long term, but that term is actually quite long. This isn't going to be a short or medium term crisis. It's going to take years, and a lot of consistent political will. I hope we're up to it.
- arinlen 4y ago
  > It's not sustainable in the long term, but that term is actually quite long. I'm not so sure about that. There were a bunch of news outlets warning that Gazprom is on the brink of a massive default. Gazprom, of all companies. If the company that subsidizes Russia's ruling regime can't make their payments in spite of sitting on a huge pile of oil and gas, that does not bode well for Russia's economy.
  - deleted 4y ago
    [deleted]
  - YarickR2 4y ago
    That bunch of news outlets was/is feeding their clients bullshit
    - thelittleone 4y ago
      Can share some sources for this? Genuinely curious.
  - dmatech 4y ago
    A default that is only due to sanctions preventing repayment of debts isn't really a meaningful default.
    - simonh 4y ago
      In some ways yes, but in practical terms it means they’re locked out of the credit markets and are going to have huge difficulty paying international suppliers. Even the ones willing to deal with them despite sanctions.
chrisco255 4y ago
Is the Euro or the Yen sustainable at this point? BOJ has a standing policy to buy unlimited JGBs. How sustainable is that?
- pyrale 4y ago
  JGBs being owned mostly domestically, that particular country's currency is probably not at risk unless big japanese institutions decide to close shop and retire abroad. As for the Euro, it's currently at a 20-year low, if that's an answer to you. Since the balance of payment is positive, there's probably no reason to be pessimistic in the long term.
  - chrisco255 4y ago
    > As for the Euro, it's currently at a 20-year low The Yen is at a 24 year low vs USD. The Yen is down 15.9% YTD. That is just an incredibly fast erosion and we're only halfway through the year.
    - pyrale 4y ago
      > we're only halfway through the year. Is there a yearly pendulum that I'm not aware of? Because if not, we've also only 21% through the century, and we've barely scratched the millenium.
ak_111 4y ago
Why isn't that already reflected in the price? Surely FX traders (who are mostly very large institutional investors) have already factored this into their models since it seems a very important factor?
- uoaei 4y ago
  It is an important factor, just not yet.
- austhrow743 4y ago
  Why the assumption that it’s not reflected in the price?
  - guerrilla 4y ago
    That's what they meant. Read the second sentence of the comment.
- RandomLensman 4y ago
  RUB is a tiny market in FX and probably not many touching it due to current risk surface. Very large institutional investors are usually not big FX speculators anyway outside of exposure from their assets. FX tends to be a bit more fast money.
- deleted 4y ago
  [deleted]
O__________O 4y ago
Russia still has 2301.64 Tonnes of gold: https://tradingeconomics.com/russia/gold-reserves https://tradingeconomics.com/russia/gold-reserves Or roughly $128.9 billion USD in gold reserves: https://www.wolframalpha.com/input?i=2301.64+Tonnes+of+gold+to+usd https://www.wolframalpha.com/input?i=2301.64+Tonnes+of+gold+...
- hef19898 4y ago
  But how many bitcoin and stable coins do they have?
  - O__________O 4y ago
    Russians, not Russia, according to this article from early Feb-2022 have $214 billion in crypto assets based on IP address analysis: https://m.timesofindia.com/business/cryptocurrency/blockchain/russians-own-12-of-the-worlds-crypto-assets/amp_articleshow/89342468.cms https://m.timesofindia.com/business/cryptocurrency/blockchai...
- Armisael16 4y ago
  What’s Russia going to do with that gold? Put it on a train a quarter of the way around the world to Beijing? It is far from trivial to move that kind of stock.
  - O__________O 4y ago
    Correct, though there is a huge demand for gold currently. Russia was buying 150 tonnes a year from 2008-2020; annual global demand is 4,000 metric tons. Even without selling it or shipping it, they could likely use it to secure debts to China example.

abirch 4y ago

The ruble is artificially up https://www.npr.org/2022/07/07/1110354162/the-artificial-strength-of-the-russian-ruble https://www.npr.org/2022/07/07/1110354162/the-artificial-str...

dannyw 4y ago
Hardly. As mentioned in the podcast, the emergency measures are more or less gone, and the Ruble is still staying strong. And raising interest rates to increase the strength of your currency is exactly what central banks can and should do. There is so much propaganda and "Russia-bad" going around in the media, whether you think it's deserved or not is irrelevant to the quality of journalism taking an extreme nosedive. Elvira Nabiullina (Russia central bank chair) is IMHO one of the smartest central bankers in the world right now. Much better than "transitory" Powell.
- outside1234 4y ago
  There is a lot of "Russia is bad" evidence in shelled out cities and dead Ukrainians. They certainly earned this one!
- gumby 4y ago
  > Elvira Nabiullina (Russia central bank chair) is IMHO one of the smartest central bankers in the world right now. Much better than "transitory" Powell. She tried to quit at the end of February but was not permitted to.
  - cuteboy19 4y ago
    There is a Soviet joke hidden in this somewhere I feel we just have to find it.
  - trhway 4y ago
    as siblings noted about Soviet joke - in today's Russia you don't quit your job, your job quits you. Actually it isn't that much of a joke today - according to the new wartime law Russian government can compel any business to produce the amount of product/service the government wants with the business having no right to refuse, and the government can force people to work overtime, weekends, holidays with the government defining what payment, if any, to happen to the business and the people.

trhway 4y ago

>Ruble is up from where it was just before the invasion. The prices in Russia reflect about 1.5-2x ruble fall against dollar since the invasion. The official ruble/dollar ratio is maintained by draconian measures/restrictions against exporters and population (plus significant depression of economy which was consuming a lot of imports, like the car market falling 6 times because most of the foreign car makers/traders are gone, similar situation in IT for example, ie. Russian economy collapsed to becoming only natural gas and oil pump). Very similar to the situation back in USSR when dollar was only 0.63 of ruble, yet it wasn't possible to buy any dollars at that price. Wrt. original post - it was obvious even back in February that the faster Ukraine wins the less hit Europe will take. Europe has been dragging its feet on military help for Ukraine and as a result dragging itself deeper an deeper into an economical crisis. Leaders of France, Germany, Italy still seem to hope that Russia will take a piece of Ukraine, and after that the things will be back to the good old times. This naïve thinking has already obviously failed, yet they are still clinging to it.

harambae 4y ago
There's usually a black market rate in that case. And.. it appears there is here too [0], but at least in May it wasn't as wildly far off as typical when the government starts fixing the exchange rate. Only 15-20% difference. [0] https://www.bloomberg.com/news/articles/2022-05-17/in-ussr-flashback-russians-are-hunting-for-black-market-dollars https://www.bloomberg.com/news/articles/2022-05-17/in-ussr-f...

SergeAx 4y ago

This is artificial. Import is very low due to sanctions, export is quite high due to energy price hike, so there's a lot of foreign currency sitting idle inside the country, and exporters should pay their expenses and taxes, so they have to sell at whatever price market is ready to buy. I actually banked on that a bit, enough to offset losses on other parts of my portfolio.

qaq 4y ago

Russia is in tough spot with this situation inflation is high if they drop the rubble it will get crazy high if they don't drop it they can't make the budget work.

cheriot 4y ago

Is there a way to look at volume of EUR/RUB exchange?

rndmind 4y ago

Are you arguing that the ruble is more stable place to store your money than the Euro?

hef19898 4y ago
Obviously the most stable plave is some non-fiat crypto-stable-coin thingy or other. /s

arinlen 4y ago

> Meanwhile, the Ruble is up from where it was just before the invasion. A massive economic sanctions package, which eliminates their ability to import goods and services while having their sole export stockpile foreign currencies, does help level the balance of trade. But that does not mean the economy is not tanking though.

throwaway290 4y ago

Whom can you sell rubble for euro at that price? No ordinary person that I know of could do it in Russia or outside last time I checked. Outside of Russia, nobody will take your ruble. In Russia, somebody may, but that's not going to be a bank and the actual cost will be much steeper than advertised rate. (US dollar skyrocketed to almost 100 ruble in March until Russian government decreed its officially worth 60 except now you basically can't legally buy western currency. HODL mode I guess?)

fny 4y ago

The price isn't what you think it means. I say this only because I have a sizable amount of rubles from an earlier trade, and *I have no way to exchange them for USD despite the exchange rate.* The price you see is a reflection of the price accepted by those able and willing to trade rubles which is currently *a limited subset of the world*. Sure, they have a massive trade surplus due to the commodity shortage, but a lot of the move is engineered through capital controls. (1) Western Ruble electronic trading is dead. It's near impossible to move rubles with any size. [https://www.risk.net/our-take/7946561/russian-ruble-trading-steps-back-in-time https://www.risk.net/our-take/7946561/russian-ruble-trading-...] (2) Moscow is forcing companies to buy rubles. (3) Moscow limited the amount of dollars that Russians could withdraw from foreign-currency bank accounts and barred banks from selling foreign currencies to customers. [https://www.wsj.com/articles/russias-economy-is-tankingbut-the-ruble-is-soaring-11653559916 https://www.wsj.com/articles/russias-economy-is-tankingbut-t...] (4) Moscow has fixed the price of gold. [https://www.kitco.com/news/2022-03-28/Russia-sets-fixed-gold-price-as-it-restarts-official-bullion-purchases.html https://www.kitco.com/news/2022-03-28/Russia-sets-fixed-gold...] So really, the "appreciation" you see is compensating you for the headache you'll have to go through to do anything meaningful with rubles. Meanwhile, Russian inflation is at 15% and GDP is collapsing. Russian imports have collapsed because *no one really wants rubles*.