No effect on rate of Ruble - because no one outside of Russia wants them. Not many inside either but that's another story. But check more than a few Oligarch's, do they friggggggggggggggen care about their Rubles and the conversion rate LMAO. Or more importantly their U.S. Dollars or EU Euros or British Pounds or Swiss Francs or Japanese Yen or .... or .... or ... - which they can't get a hold of. Not to mention Yachts, etc.
The United States stopped the Russian government on Monday from paying holders of its sovereign debt more than $600 million from reserves held at U.S. banks, in a move meant to ratchet up pressure on Moscow and eat into its holdings of dollars. Under sanctions put in place after Russia invaded Ukraine on Feb. 24, foreign currency reserves held by the Russian central bank at U.S. financial institutions were frozen. But the Treasury Department had been allowing the Russian government to use those funds to make coupon payments on dollar-denominated sovereign debt on a case-by-case basis.
Russia says it received $3.6 billion less than it forecast from March oil and gas sales, suggesting the Ukraine war and Western sanctions hit exports https://www.yahoo.com/news/russia-says-received-3-6-130035698.html
Don't miss the Potemkin Currency/Catherine the Great story. Some entertainment value there and it makes a point. FROM NPR. How Russia rescued the ruble Russia said last week that it wants the European countries that buy its natural gas to make their payments in rubles, rather than dollars or euros. A month ago that might have seemed like a pretty good deal: the ruble was down 40 percent, at 139 rubles to the dollar, in the wake of Russia's invasion of Ukraine. Since that low point on March 7, however, the Russian ruble has staged a dramatic recovery. At the time of writing, it was trading at 84 to the dollar, which is right back where it was at the time of the invasion. And this is no dead cat bounce. It's a sharp and sustained recovery that made the ruble the top performing currency in the world in the month of March. And yet, all of the sanctions imposed when the war began are still in place, and in some cases they're even more robust. So how have the Russians managed to revive their currency? The Hole in the Wall Gang There are several components to this recovery. The first is thanks to the enormous hole in the sanctions imposed by the coalition of countries allied with the United States: natural gas. The sanctions are designed to restrict Russia's ability to acquire foreign currency, and dollars and euros in particular. But several European countries continue to buy Russian gas, because they have become so dependent on it, and there are not enough alternative suppliers to meet demand. China and India, and the net result is that there is still a steady flow of foreign currency into Russia. That has eased concerns that Russia would become insolvent, and it has helped put a floor under the ruble. There's another hole in the sanctions that's worth mentioning here: the sovereign debt carve out. One of the biggest and most impactful sanctions on Russia was the freezing of its foreign accounts. Russia holds about $640 billion worth of euros, dollars, yen and other foreign currencies in banks around the world. About half that amount is located in the US and Europe. The sanctions blocked Russia's access to that money ... except when it comes to making the interest payments on its sovereign debt. The US Treasury left a window open to allow financial intermediaries to process payments for Russia. That window is scheduled to close this month, but it has been a big help to Russia. Without it, Russia might have needed to raise dollars by selling rubles, which would have put downward pressure on the currency. And were it not able to raise those dollars, it would have defaulted. interest rates to 20 percent. Any Russian who might have been tempted to sell their rubles and buy dollars or euros now has a big incentive to save that money instead. The fewer rubles that go up for sale, the less downward pressure there is on the currency. Next comes a government requirement on Russian businesses that 80 percent of any money that those businesses make overseas has to be swapped into rubles. This means that a Russian steelmaker that makes a hundred million euros selling steel to a company in France has to turn around and change 80 million of those euros into rubles, regardless of the exchange rate. There are a lot of Russian companies doing a lot of business with foreign companies, making a lot of euros and dollars and yen. The order to convert 80 percent of those revenues to rubles creates significant demand for the Russian currency, thus helping to prop it up. The Kremlin also issued an edict banning Russian brokers from selling securities owned by foreigners. Many foreign investors own Russian corporate shares and government bonds, and they might understandably want to sell those securities. By banning those sales, the government is shoring up both the stock and bond markets, and keeping money inside the country, all of which helps keep the ruble from falling. Russian citizens themselves have been targeted by the government, which has restricted them from transferring money abroad. The initial ban said all foreign exchange loans and transfers were to be suspended. This served to keep foreign currency in the country and discourage Russians from selling rubles for dollars or euros, which would put pressure on the currency. Those restrictions have been eased somewhat recently, to give breathing room to Russians who regularly send money abroad, but conversions of hard currency are limited to just $10,000 for individuals through the end of this year. Perhaps the biggest factor juicing the ruble is a risky ploy by Vladimir Putin that we mentioned at the top of the newsletter: telling certain buyers of Russian natural gas that they must henceforth pay their gas bills in rubles. Natural gas contracts are usually written requiring payment in euros or dollars, and the countries who buy natural gas — the European Union, the US, Canada, Australia, New Zealand, Japan, South Korea, and Taiwan — tend not to have big reserves of rubles on hand. So if Putin is successful in forcing these countries to pay in rubles, they're going to have to go out and buy them. A lot of them. Demand for the currency will surge, and the price of the ruble will naturally rise. It's the anticipation of that rise that has helped drive the market value of the ruble higher. A Potemkin Currency You could say that these moves by the Russian government are just business as usual. After all, the Federal Reserve tweaks interest rates all the time. The U.S. Treasury has restrictions on remittances to certain countries. And why shouldn't a country be able to stipulate what currency it gets paid in? And don't governments have a responsibility to defend their currencies anyway? All fair points. What the Russian government is up to here, though, is more than defense of a currency: it is manipulating the market for rubles, and manufacturing demand that would not otherwise exist. Some observers are saying that Russia has essentially created a Potemkin currency. This is a reference to Grigory Potemkin, who was appointed governor of Crimea after it was annexed by Catherine the Great in 1784. Eager to show Catherine how successful he had been in resettling Crimea with Russian villagers, Potemkin supposedly built and populated a mobile village which he assembled, disassembled and then reassembled along her route as she inspected the region. The governor of the Central Bank of Russia, Elvira Nabiullina, is essentially playing Potemkin to Putin's Catherine, using a range of tools to make the ruble look like a currency that has value, whilst in fact very few people outside of Russia want to buy a single ruble unless they absolutely have to, and many people inside Russia don't really want rubles either. There are big risks to all this government intervention. The protectionist measures enacted by the CBR are effectively a kind of bridge for the ruble. If Russia manages to come to some kind of resolution over Ukraine that involves the withdrawal of sanctions and the reestablishment of trade relations with the West, then the ruble might hold its current value once the measures are withdrawn. If the measures are withdrawn without some kind of resolution, however, the ruble could collapse, hammering the economy, jacking up inflation and causing enormous pain to the Russian people. And the measures — some of them, at least — will have to be withdrawn eventually. Russian borrowers can't keep paying interest rates of more than 20 percent for long, if they can even conceive of borrowing at that price. Growth will be stifled — the Russian economy is already expected to contract by more than eight percent this year — and industry will slump. Perhaps the greatest risks are those associated with Putin's natural gas ploy. As we said before, the natural gas contracts that buyers have signed with Russia all say that payment will be made in euros or dollars or other foreign currencies. Putin can't just cross out "dollars" or "euros" and write in "rubles" where those contracts stipulate how to pay. He has to renegotiate the terms of those contracts. And if he does so, it's likely that those countries will drastically reduce the amount of natural gas they buy from Russia. Russia is the world's biggest producer of natural gas, and the biggest exporter, but it's not the only source out there, and buyers of Russian gas could pivot to new suppliers. The US is already sending shipments to Europe. There's talk about supply coming from the UK, Norway, Qatar and Azerbaijan. Israel is mulling the idea of a pipeline. The countries that buy large amounts of Russian gas probably couldn't all wean themselves off it overnight, but if Russia insists on making this move, it risks turning one of its biggest revenue streams into a trickle. In short, the problem with creating a facade — as Russia has done with its currency — is not just that it might collapse, it might also collapse on you.
Did You Hear The Shot? I have been involved in financial markets for roughly 40 years, the news out this past Thursday was in my opinion more important than ANY announcement during those years. In fact, when I heard it, I thought of it as “the shot heard ’round the world”! But here we are Sunday and almost no discussion nor coverage of “Russia will demand trade payment from the unfriendly countries (the West) in gold…or rubles if they wish”. Are people so dumbed down they do not understand what was said? First a little background. Russia has been sanctioned by the West and even had some of their FOREX reserves “frozen” (read STOLEN) in an effort to bleed them dry financially and stall military efforts. The freeze came several years after the US very mistakenly began threatening Russia with a cutoff from the SWIFT system. If anyone believes that Vladimir Putin has not used these years since the original threats, to prepare, I believe you are grossly mistaken. You see, the West absolutely needs Russian trade material more than Russia needs dollars. Russia does not need the dollars to survive because they are not highly indebted. In fact, they are only 14% debt to GDP whereas most western nations are well above 100%. Besides, who does Russia owe money to that requires dollar payments? Western financial institutions? Do you see where this goes? By using SWIFT and the dollar as a weapon versus Russia, the US just blew a hole under the waterline in the USS Dollar! To explain, if Russia demands either gold or rubles from the West, then recipients of trade will need gold and or rubles to make settlement. Some nations still have gold (poor Canada) but few have any rubles held in their reserve accounts. (In fact, the US has very small foreign reserve balances as it was not needed with the dollar itself being the world’s reserve currency and dollars can and are simply printed). How will the US settle trade with Russia? By sending Ft. Knox gold…which may or may not be there as no audit has been done since the 1950’s? Or by paying with rubles which we do not own? Or will we just forego the many natural resources we import from Russia? The net result is severe dollar weakness and a strong bid under gold AND the ruble because any western nation wishing to import Russian material will need to either buy gold or rubles for payment. Another way of saying this is; they will need to sell either their local currency (or their dollar reserves held) in order to procure gold/rubles to make payment. Do you remember when supply and demand used to “matter”? In the same way that Russia views the Ukraine as we did the Cuban missile crisis, Russia’s demand for payment in gold/rubles is to Kissinger arranging for Saudi Arabia to ONLY accept dollars for oil. Settlement flows are huge and not just on the margin. They are not just huge, they are “contagious” if you will? There are many countries who today use dollars because they have to, they have been forced to. I also believe much of the current trade settlement in dollars would be done in other currencies if it was “allowed”. It will not be a shock to see dollar trade flows shrink dramatically as many nations will use this as an opportunity to shed their dollar hegemony shackles! Let’s finish with an overview. The US has for years relied on “King dollar” to support living well beyond our financial means. Having the privilege of issuing the world’s reserve currency (and the most powerful military) allowed the US to borrow $ trillions upon trillions. This is now changing after our bungled retreat from Afghanistan…and now Russia challenging the trade dollar. Can you imagine what US GDP would have been all these years without massive deficit spending? Can you imagine the levels where equity markets would be trading if not for all the easy and free credit thrown around? Can you imagine where interest rates would have been (and will be) if it wasn’t for reserve currency privilege? And thus, can you imagine what the US standard of living would have been? Unfortunately, we are about to find out the answers to all these questions! Lastly, please understand the coming problems as they will entail every facet of life. US (and global) financial markets will be greatly affected as lower dollar demand will create a de facto margin call on an already struggling Ponzi scheme. Also, trade balances will be forced back into relative realignment. Meaning those with the greatest trade deficits will feel the pain the most. Especially those nations that allowed their manufacturing and production to leave and instead import. Is the current predicament because of poor judgement/decisions/planning…or, was it the plan all along? https://www.jsmineset.com/2022/03/28/did-you-hear-the-shot/
MOEX Russia Index (IMOEX.ME) MCX - MCX Real Time Price. Currency in RUB In watchlist 2,662.79 -124.90 (-4.48%) At close: 06:51PM MSK For shame, for shame. Dead cat go bounce, bounce, bounce ... splat.
A lot of lessons from that period. One could equally ask if the RUSSIANS will view Putin the same way that they started to view Khruchev after the Cuban Missile Crisis. That was the beginning of the period when his eventual removers started to plot against him for his dangerous handling of the matter and the resulting economic problems - particularly in the agricultual sector- that began to spin down and out. The Cuban missile crisis was in 62 and he was gone in 64. We have plenty to worry about. So does Putin. Also, the fellow who wrote that article is a hard core precious metals/gold trader so he is talking is book. Doesn't make him wrong. Just that I would have that as a consideration.
All of this is exactly correct, especially the part about building a bridge. Russia needs to end out somewhere because their current economic situation is not sustainable with all of these emergency measures. Ive talked a lot about much of the points in this article including Russia needs dollars and euros moving in and out of their economy for it to be stable. The whole pay in rubles for gas is a run at petrodollaring the ruble. Won’t work. Right now Russia is bleeding western money to the tune of a $40 billion drawdown from their already halved reserves in the 30 days of the war. We see Lavrov in India trying to sell oil but what are the Russians going to do with a rupee? Not much. The rupee to ruble market doesn’t have much but oil for chemicals and bootleg pharmaceuticals. That won’t help the Russians too much. The Russians need machinery, tech, and automotives. Getting oil to China is harder than India and they can only help with minor tech stuff. The point is the Russians need euros and dollars or they will not be able to keep the economy they had a month ago going. Everybody is looking at this overweight Russian defense guy that stroked out a few weeks ago to save the day but Lavrov that needs to pull a rabbit out of hat. Anyways, it will be interesting to see what they’ve cobbled together come June/July.
The ruble has bounced back. Are sanctions not working? ANTONIO BRONIC / REUTERS Vladimir Putin, shunned by the international community, is exerting himself to prop up the ruble. FROM OUR OBSESSION Fixing capitalism Capitalism is just a collection of human decisions. We can change it if we want to. By Samanth Subramanian Looking into the Future of Capitalism Published April 4, 2022 Barely a month after the West imposed heavy sanctions on Russia, the ruble has bounded back up against the US dollar, to levels last seen before the invasion of Ukraine. It prompts the question: Why isn’t the ruble feeling the pain? Are sanctions not working? Part of the reason behind this rebound is that Russian authorities are doing plenty to boost the ruble—”a lot of manipulation,” as Anthony Blinken, the US secretary of state, said on Sunday (Apr. 3). ”People are being prevented from unloading rubles… That’s artificially propping up the value.” But these capital controls are unsustainable for an indefinite period of time, Blinken added. “I think you’re going to see that change.” High energy prices are pushing the ruble up Additionally, the soaring prices of oil and gas have meant the value of Russia’s exports has risen, said William Jackson, the chief emerging markets economist at Capital Economics, a research firm in London. “At the same time, the impact of sanctions has caused domestic demand and imports to weaken sharply,” Jackson said. “So Russia’s trade and current account surpluses are probably increasing dramatically, creating demand for rubles.” As long as energy prices stay high—and as long as Russia keeps most of its oil and gas customers—the ruble will likely continue to be pushed upwards, Jackson said. But these factors may yet change. Germany, France, and other big European purchasers of Russian gas are facing pressure from Russia to make payments in rubles, a move that would prop the currency up even more. If they refuse, and if Vladimir Putin does indeed follow through on his threat to cut them off, that sudden halt in payments will hit the ruble hard. The ruble’s value is also not the best barometer of how effective the sanctions are. “Irrespective of the moves in the ruble, the sanctions are hurting Russia’s economy hard,” Jackson said. “Inflation is already surging, the banks are under strain and financial conditions have tightened dramatically.” https://qz.com/2150212/the-ruble-has-bounced-back-are-sanctions-not-working/?utm_source=YPL
There is or can be a lot of fierce gyrating and jockeying around in a country's currency value after a disaster-crisis that takes some time sort itself out. The fact that the currency goes up is not necessarily a sign that everything is groovy in the economy- only that for some reason there is demand for that currency- from either the open market or rigged by the government. Example. In 2011 Japan had that earthquake/tsunami disaster. The Nikkei plunged 5% but the frigging Yen went straight like a rocket ship and that was not because of everyone suddenly giving the strength and reliability of the economy a big thumb's up. They clearly were taking it up the bo-bo and it was a massive negative event. On the contrary, there was a sudden realization that rebuilding of a good part of Japan was going to creat a mega demand for local currency.