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Ask HN: Why did the ruble stabilize and what's going on?

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Re: Ask HN: Why did the ruble stabilize and what's going on?

#71
post #65

Earlier quoted context omitted.

As is usually the case when monstrous plots are afoot, the villain cheerfully told the world exactly what he was planning to do and why. He wants to recreate the Soviet Union. https://www.theguardian.com/commentisfree/2022/feb/22/putin-... Initial "peace proposals" from Russia included a rollback of NATO's military assistance to its 1997 condition, explicitly limiting the sovereignty of Poland and the Baltic states:…

Quoted post unavailable.

Russia can't manage its economy. That's step 1 for any solid plan of taking care of anything.

Re: Ask HN: Why did the ruble stabilize and what's going on?

#72

Russia 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

Thanks 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-e...

Re: Ask HN: Why did the ruble stabilize and what's going on?

#73
post #31

Supply 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…

Issue is that only the west is sanctioning them, not e.g. China. By sanctioning them we are just strengthening the Russia-China, India, etc. relationships. To think the world relies on the west to a point where its existential is a bit excessive, in my opinion

Re: Ask HN: Why did the ruble stabilize and what's going on?

#74

Earlier quoted context omitted.

>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…

>60% of global GDP is not a small fraction. As for countering sanctions, no one doubts the cat and mouse chase, but the Kremlin will be forced to funnel these to its weapons industry undermining economic and social development, akin to North Korea mid/long term.

60% is a lot, but it may not be enough to be existential here

Re: Ask HN: Why did the ruble stabilize and what's going on?

#75
I 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.

Re: Ask HN: Why did the ruble stabilize and what's going on?

#76
Alex 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], 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] 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

Alternative: https://rumble.com/v11paoj-nabiullina-and-putin-discuss-the-...

Re: Ask HN: Why did the ruble stabilize and what's going on?

#78
I’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

1. https://www.nytimes.com/2022/03/23/business/putin-russian-oi...

2. https://seekingalpha.com/amp/article/4498704-russias-3-step-...

Edit: Spelling

Re: Ask HN: Why did the ruble stabilize and what's going on?

#79
The 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.

Re: Ask HN: Why did the ruble stabilize and what's going on?

#80

I’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 stand…

Those 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.

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