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Ruble Exchange Rate Fluctautions And The Economic War - Foreign Affairs - Nairaland

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Ruble Exchange Rate Fluctautions And The Economic War by OutThere: 9:32am On Dec 17, 2014
http://vineyardsaker..com/2014/12/ruble-exchange-rate-fluctuations-and.h

Aleksei Kettunen
Translation to English: Petri Krohn

Russian ruble exchange rate changes have all the ingredients of success detective story. On Monday, 15.12. 2014 ruble weakened to a record low since 1998: the dollar cost 64 rubles and 79 rubles to the euro. In recent years, the price of an euro has been hanging around 50 rubles, or 5 000 rubles withdrawn from an ATM for a night of adventures in St. Petersburg would cost around 100 euros.

Last night, the Russian Central Bank raised its base rate drastically from 10.5 per cent to 17 per cent to curb currency speculation. The price of an euro during the day momentarily exceeded the limit of 100 rubles or 80 rubles for a dollar. Now at the end of the market day the ruble has slightly appreciated: $ 1= 72.60 rubles and 1 euro = 90 rubles. The official rates of the Russian Central Bank before tomorrow's market day are $ 1 = 61.15 rubles and 1 Euro = 76.15 rubles

What is this about?

The economic sanctions imposed by the US and the EU prevent granting of loans to Russian companies with a payment period of more than 30 days. As Russian companies have been borrowing money from the West the entire post-Cold War period at a lower rate of interest and the penalties now prevent loan restructuring and follow-up funding, these companies must now get euros and dollars to take care of their loans, thereby creating more demand for foreign currency in the Russian market and thus weakening the ruble.

Also, the fall in the price of oil reduces Russia's foreign exchange earnings, which in a situation of high demand for currency weakens the ruble.

The Eurasian Economic Union comes into force on January 1, 2015. Most likely at the same time the Russian ruble and foreign exchange markets will change drastically, and the Russian economy will take a distance to the dollar and the euro. Now the West is doing its best to weaken the ruble and thus destabilize the Russian economy and the political system before the end of the year. The maxima of the West is to prevent the emergence of the new economic union and closer cooperation within the BRICS. Taking into account the Christmas holidays, the West has little more than a week to succeed.

What are the Russian authorities doing? Trying their best to defend the ruble and the Russian economy. Their actions are limited by two factors: first, in this battle Russia's foreign currency reserves may be used only minimally (for which there are far better uses), and, secondly, the entire process must take place under the rules of the dollar-based global liberal economic model (because Russia will disconnect from the dollar system only later).

For the rest of the year the going will only get tougher. Even under the liberal economic model the Central Bank of Russia and the government have much stronger measures to stabilize and strengthen the ruble, which they probably will introduced as needed.

Russia will detach itself from the global dollar economy according to earlier plans .Until then it will continue defending the ruble. The West on its part will make every effort to weaken the ruble. What will be the end result? Time will tell – or the stars. I predict that next year will see a surprise!

What might this 2015 surprise be?

The Russian government has already informed Russian banks that the amounts of reserve currency deposits placed by various ministries in Russian banks will be drastically less than during previous years. These funds will instead be used to finance various domestic infrastructure projects. All this means that the Russian government obsessed with saving during all the 2000s and 2010s will become a big spender investing in strategical domestic projects. This will considerably strengthen Russian economy.

Another factor will be the Eurasian Union.

The third factor is a combination of recent Russia-China, Russia-Iran and Russia-India megaprojects and financing from the New Development Bank NDB (formerly referred to as the BRICS Development Bank). Russian President, Government and Bank of Russia have consistently informed the market players that now is the time to concentrate on domestic markets and domestic financial resources. All this will probably mean the unlinking of Russian economy from dollar-dominated Western economy.

Enjoy the cliffhanger!
Re: Ruble Exchange Rate Fluctautions And The Economic War by Missy89(f): 6:32am On Dec 18, 2014
The rouble and the Russian economy has been officially smashed to smithereens.


Good luck to Putin thou. He would need it!

1 Like

Re: Ruble Exchange Rate Fluctautions And The Economic War by snthesis(m): 3:11pm On Dec 18, 2014
hmmm
Russia on the brink

yet my people would be quick to prejudice the economic policies of the present GEJ government in dealing with the current slump in oil price.
Re: Ruble Exchange Rate Fluctautions And The Economic War by Missy89(f): 4:25pm On Dec 18, 2014
snthesis:
hmmm
Russia on the brink

yet my people would be quick to prejudice the economic policies of the present GEJ government in dealing with the current slump in oil price.

can you tell us what those policies are?
Re: Ruble Exchange Rate Fluctautions And The Economic War by NairaMinted: 12:10am On Dec 19, 2014
Missy89:
The rouble and the Russian economy has been officially smashed to smithereens.


Good luck to Putin thou. He would need it!

Yes, he would need all the luck (and help - kudos to China) he can get. This isn't over yet - by any stretch of imagination...


[size=18pt]Free Fall of the Ruble – A brilliant ploy of Russian economic Wizards? Who’s chess game?[/size]
by Peter Koenig

The world is still hell-bent for hydrocarbon-based energy. Russia is the world’s largest producer of energy. Russia has recently announced that in the future she will no longer trade energy in US dollars, but in rubles and currencies of the trading partners. In fact, this rule will apply to all trading. Russia and China are detaching their economies from that of the West. To confirm this decision, in July 2014 Russia’s Gazprom concluded a 400 billion gas deal with China, and in November this year they signed an additional slightly smaller contract – all to be nominated in rubles and yuan.

The remaining BRICS – Brazil, India and South Africa – plus the members of the Shanghai Cooperation Organization (SCO) – China, Russia, Kazakhstan, Tajikistan, Kirgizstan, Uzbekistan and considered for membership since September 2014 are also India, Pakistan, Afghanistan, Iran and Mongolia, with Turkey also waiting in the wings – will also trade in their local currencies, detached from the dollar-based western casino scheme. A host of other nations increasingly weary of the decay of the western financial system which they are locked into are just waiting for a new monetary scheme to emerge. So far their governments may have been afraid of the emperor’s wrath – but gradually they are seeing the light. They are sensing the sham and weakness behind Obama’s boisterous noise. They don’t want to be sucked into the black hole, when the casino goes down the drain.

To punish Russia for Ukraine, Obama is about to sign into law major new sanctions against Russia, following Congress’s unanimous passing of a recent motion to this effect. – That is what the MSM would like you to believe. It is amazing that ten months after the Washington instigated Maidan slaughter and coup where a Washington selected Nazi Government was put in place, the MSM still lies high about the origins of this government and the massacres it is committing in the eastern Ukraine Donbass area.

Congress’s unanimity - what Congress and what unanimity? – Out of 425 lawmakers, only 3 were present for the vote http://www.informationclearinghouse.info/article40489.htm. The others may have already taken off for their year-end recess, or simply were ‘ashamed’ or rather afraid to object to the bill. As a matter of fact, of the three who were present to vote, two at first objected. Only after a bit of arm-twisting and what not, they were willing to say yes. This is how the ‘unanimous’ vote came to be, as trumpeted by the MSM – unanimous by three votes! The public at large is duped again into believing what is not.

What new sanctions does this repeatedly propagated bill entail? – It addresses mostly Russian energy companies and defense industry with regard to sales to Syria, as well more anti-Russia propaganda and ‘democratization’ programs in Ukraine – and Russia; all countries with the objective for regime change.

How do these sanctions affect Russia, especially since all Russian energy sales are no longer dollar denominated? – Sheer propaganda. The naked emperor once more is calling an unsubstantiated bluff. To show his western stooges who is in power. It’s an ever weaker showoff.

Now – as a consequence of declining oil prices and of western ‘sanctions’ – of course, what else? - Russia’s economy is suffering and the ruble is in free fall. Since the beginning of the year it lost about 60%; last week alone 20%. As a result and after serious consideration, says MSM, the Russian Central Bank decided a few days ago to increase the interest of reference from 10.5% to 17% to make the ruble more attractive for foreign investors. It worked only for a few hours. Raising the interbank interest was Putin’s reply to Obama’s bluff – feeding at the same time western illusion about Russia’s decline.

The propaganda drums tell you Russia is helpless because the world has lost the last bit of confidence in President Putin – of course. Regime change is on the agenda. Mr. Putin must be blamed as the culprit, hoping to discredit him with his people. He is leading Russia into a deep recession; the worst since the collapse of the Soviet Union. The mainstream media show you interviews with average mainstreet Russians saying they have lost all their savings, their salaries and pensions are worth nothing anymore and they don’t know how to survive this coming calamity.

In reality, at least 80% of the Russian population stands solidly behind Vladimir Putin. He has brought them universal education, health care and fixed infrastructure that was decaying after the fall of the Soviet Union. President Putin is literally revered as a hero by the vast majority of Russians – including the country’s oligarchy.

In fact, nobody in the western economic system these days is dealing in rubles. In short-sighted connivance with Washington, the treasuries of the western vassals are releasing their ruble reserves – which Russia does not buy, thereby flooding the market. Russia not only has large dollar reserves, plus the ruble is backed by gold, a fact consistently omitted in the MSM. For now, Russia prefers to let the ruble plummet.

Under another ‘arrangement’ by bully Obama, Middle Eastern oil producing puppets like Saudi Arabia and the Gulf States are overproducing and flooding the market with petrol and gas, thereby driving the price down to the ostensible detriment of Russia and Venezuela, both countries where Washington vies for regime change. A double whammy thinks Washington, buying kudos with the stooges. The sheiks that control their energy output apparently have been promised enough goodies from Washington to bite the bullet and take their own losses.

Russia needs rubles. That’s her currency. That is the currency Russia needs for future trading – detached from the western monetary system.

When Russia deems that her currency has reached rock-bottom, she will buy back cheap rubles in the market with massive amounts of dollars. Russia may then flood the western market – with dollars, and by now we know what that does to a currency – and simultaneously buy back rubles from the West. A brilliant move to reestablish Russia’s currency in a new emerging monetary system – which Europe would be welcome to join, but willingly, no by Washington style arm-twisting.

Is this another precursor to war? A nuclear confrontation or Cold War II? – Precursor to a false flag attempting Moscow to fall into the trap? - Not necessarily. Russia is playing a clever chess game, diplomacy at its best. Instead of sabre rattling – Russia is coin rattling. It might lead to a western financial fiasco early in 2015 for the dollar and euro denominated economies. And the winner is…?

Peter Koenig is an economist and geopolitical analyst. He is also a former World Bank staff and worked extensively around the world in the fields of environment and water resources. He writes regularly for Global Research, ICH, RT, the Voice of Russia, now Ria Novosti, The Vineyard of The Saker Blog, and other internet sites. He is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed – fiction based on facts and on 30 years of World Bank experience around the globe.

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Re: Ruble Exchange Rate Fluctautions And The Economic War by Shock(m): 4:07am On Dec 19, 2014
NairaMinted:


Peter Koenig is an economist and geopolitical analyst. He is also a former World Bank staff and worked extensively around the world in the fields of environment and water resources. He writes regularly for Global Research, ICH, RT, the Voice of Russia, now Ria Novosti, The Vineyard of The Saker Blog, and other internet sites. He is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed – fiction based on facts and on 30 years of World Bank experience around the globe.


So in other words, he was paid to write this pure rubbish - no surprises there!

The writer displays so much ignorance about economics that makes one conclude that his former role at the World Bank is most likely not economics related. In other words, he is John Snow and he knows absolutely nothing.

Trading in local currencies offer very little consolation. Money is fungible. If the Chinese accept Ruble from russia as a means of payment in the place of dollars, they will simply immediately convert their Ruble to USD or buy gold with it - no central bank in the world will hold an Emerging markets currency in its foreign reserves. Even Belarus, one of Russia's biggest trading partners , no longer want to be paid in Rubles. Ironically, even Russia itself is clinging on dearly to its US dollars!

Russia is becoming increasingly isolated by the day. Other so called BRICS countries are secretly cutting their deals with Washington. India will be hosting Obama as the grand chair for its major Republic day event. China cut deals on technology, climate and long term Business Visas.

Russia is no longer dictating terms. Most countries realize how desperate Russia is, and are now taking advantage of it. China is set to buy some of its most advanced technologies - a deal Russia would have flatly rejected a year ago. In the next year or two, China may begin to manufacture its own S400 missile systems - Probably even field something more technologically advanced than the ruskies.

The US on the other hand is far stronger than it was 3 or 4 years ago. It's economy is growing faster than any other developed market, its trade deficit has continued to shrink, and it has now emerged as a major rival to OPEC.

The biggest tip in winning an economic cold war is picking your opponent carefully - By taking on the US, Russia made a strategic error. The US is too much of a formidable foe. The Ruskies underestimated Washington's ability to form and keep an European coalition together or the potential harm from its booming shale oil industry.
Re: Ruble Exchange Rate Fluctautions And The Economic War by snthesis(m): 7:49am On Dec 19, 2014
Missy89:


can you tell us what those policies are?
the first that comes to mind is the devaluation of the Naira rather than use our foreign exchange reserves in keeping the previous benchmark

you can read more herehttp://nairametrics.com/emefiele-explains-four-reasons-why-the-cbn-devalued-the-naira/

additional policies include - issuance of a circular instructing banks to keep a net zero position for foreign exchange. (which aims to curb hoarding of Foreign exchange)
Re: Ruble Exchange Rate Fluctautions And The Economic War by NairaMinted: 8:59am On Dec 20, 2014
Shock:



So in other words, he was paid to write this pure rubbish - no surprises there!

..... .

My bad. Next time i will look from an article from an expert that writes for the likes of CNN, BBC, Faux News, etc. Most importantly I will make sure that he/she isn't paid grin

1 Like

Re: Ruble Exchange Rate Fluctautions And The Economic War by Shock(m): 2:45pm On Dec 20, 2014
NairaMinted:


My bad. Next time i will look from an article from an expert that writes for the likes of CNN, BBC, Faux News, etc. Most importantly I will make sure that he/she isn't paid grin

If you could also ensure that he/she isn't a complete m0ron, that will be great.

1 Like

Re: Ruble Exchange Rate Fluctautions And The Economic War by Nobody: 10:28pm On Dec 20, 2014
Shock:



So in other words, he was paid to write this pure rubbish - no surprises there!

The writer displays so much ignorance about economics that makes one conclude that his former role at the World Bank is most likely not economics related. In other words, he is John Snow and he knows absolutely nothing.

Trading in local currencies offer very little consolation. Money is fungible. If the Chinese accept Ruble from russia as a means of payment in the place of dollars, they will simply immediately convert their Ruble to USD or buy gold with it - no central bank in the world will hold an Emerging markets currency in its foreign reserves. Even Belarus, one of Russia's biggest trading partners , no longer want to be paid in Rubles. Ironically, even Russia itself is clinging on dearly to its US dollars!

Russia is becoming increasingly isolated by the day. Other so called BRICS countries are secretly cutting their deals with Washington. India will be hosting Obama as the grand chair for its major Republic day event. China cut deals on technology, climate and long term Business Visas.

Russia is no longer dictating terms. Most countries realize how desperate Russia is, and are now taking advantage of it. China is set to buy some of its most advanced technologies - a deal Russia would have flatly rejected a year ago. In the next year or two, China may begin to manufacture its own S400 missile systems - Probably even field something more technologically advanced than the ruskies.

The US on the other hand is far stronger than it was 3 or 4 years ago. It's economy is growing faster than any other developed market, its trade deficit has continued to shrink, and it has now emerged as a major rival to OPEC.

The biggest tip in winning an economic cold war is picking your opponent carefully - By taking on the US, Russia made a strategic error. The US is too much of a formidable foe. The Ruskies underestimated Washington's ability to form and keep an European coalition together or the potential harm from its booming shale oil industry.

I think Russia is stronger than you describe. The Ruble has been weakened, Russia has structural problems and Putin can be said to have delusions of grandeur but Russia has also monetary reserves on which they can fall back for some time.

We should also not underestimate the patriotic mentality of Russian people who are ready to accept shortages for the sake of their homeland. Putin enjoys great popularity and Russians are used to some sort of hardship and are willing to endure it in the name of patriotism.

It must also be said that as much as Russia depends on international trade, other nations also depend on Russia and Putin is aware of this interdependency.

Russia may suffer a great deal from Putin's foreign policies but it will probably take more time for the Russian economy and people to feel it.

I hope a solution will be found before it happens.

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