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The Collapse of the Ruble?

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Len Hyet
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The Collapse of the Ruble?

Postby Len Hyet » Tue Dec 16, 2014 1:04 pm

Hoo boy, this one is gonna be rough.

The Russian currency crashed past 100 against the euro Tuesday, the latest milestone in a currency rout that has rapidly gained momentum despite a huge emergency rate hike from the Central Bank.

One ruble became worth less than one euro cent at 3:13 p.m., according to data from the Moscow Exchange. At the same time, the Russian currency plummeted to 80.1 against the U.S. dollar.

The crash took the ruble's fall Tuesday to 20 percent, the largest one-day currency movement since the financial crisis of 1998 and compounding a 10 percent tumble the previous day.

The ruble later reduced its losses, and at 9 p.m. had stabilized around 8 percent weaker against the greenback at 70 and 11 percent down versus the euro at 89.

The Russian currency has now fallen 55 percent against the dollar since the beginning of the year, making it the worst performing currency in the world in 2014.

"The Central Bank's credibility is in tatters,” said Timothy Ash, an emerging-markets analyst at Standard Bank, in a note to investors Tuesday.

Earlier Tuesday, the ruble jumped sharply, strengthening as much as 10 percent to 58.1 rubles against the dollar, following an overnight announcement from the Central Bank that it was increasing interest rates to 17 percent from 10.5 percent.

But the gains were short-lived, as oil price weakness and sentiment once again intensified pressure on Russia's tumbling currency.

Brent crude dropped below $60 a barrel, reaching $59.02, a level not seen since 2009 on Tuesday.

Prime Minister Dmitry Medvedev convened a meeting to discuss the financial situation Tuesday, according to a government press release.

The gathering was attended by Deputy Prime Minister Igor Shuvalov, Kremlin economic aide Andrei Belousov, Finance Minister Anton Siluanov, Economic Development Minister Alexei Ulyukayev and Central Bank chairwoman Elvira Nabiullina, the press release said.

Ulyukayev said after the meeting a set of measures to stabilize the situation had been discussed, including measures to boost access to hard-currency liquidity from the Central Bank and legislative initiatives to support banks and empower the regulator, according to news agency RBC.

With its largest interest rate hike since the 1990s, the Central Bank bet Tuesday that a higher return on deposits and savings would make the ruble more attractive, easing the pressure exerted by a declining oil price and Western sanctions on Moscow imposed as a result of the Ukraine crisis.

Central Bank chairwoman Elvira Nabiullina said Tuesday that Russians that they should get used to living in a “new zone,” according to an interview on state-owned television channel Rossia-24.

The Central Bank, which has already spent over $70 billion of its foreign currency reserves this year defending the ruble, will likely be forced into market interventions, analysts at Sberbank CIB said in a note to investors Tuesday.

“Meaningful currency interventions must follow the huge Central Bank rate hike,” the analysts said.

Despite speculation of intense political pressure on the Central Bank to try to tame the ruble without frittering away Russia's currency reserves, President Vladimir Putin has not commented on the currency's dramatic recent decline.

The market turbulence was caused by “emotions and a speculative mood,” Putin's spokesman Dmitry Peskov said Tuesday, according to Russian news agency RIA Novosti.

The ruble's tumble in recent days has sparked heavy criticism of Russia's authorities from investors and lawmakers.

"The fall of the ruble and the equity market is not only a reaction to the low price of oil and sanctions but to a distrust of the government's economic measures," former Finance Minister Alexei Kudrin wrote on Twitter in the early hours of Tuesday morning.

Others said that the Central Bank and her chairwoman Elvira Nabiullina had disastrously miscalculated the situation.

"Lack of action had left the stability of the very financial system at stake. I am not sure whether Nabiullina can survive this," analyst Ash said.

“It has only to be a matter of time before the rating agencies respond with ratings downgrades, likely to junk status.”


Siggity Source

This one is gonna hurt people. We're looking at a 1998 style tumble of the ruble, maybe worse. The Russian economy may not be far behind.

Thoughts oh ye armchair economists of NSG? Is the ruble doomed? Will it recover? What's going to happen to the Russian economy?

Me? I'm a little scared. Putin has acted out when the economy has taken a hit before, and with him already taking a big old bite of the Ukraine I'm concerned that a serious hit to the Russian economy might end up with some seriously unforeseen consequences.

Edit: For shiggles, here's an opinion piece predicting the collapse of the Russian Banking System because of the freefalling ruble.

A Russian Bank Manager predicts the collapse of the Banking System of Russia.
Last edited by Len Hyet on Tue Dec 16, 2014 1:07 pm, edited 1 time in total.
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The balkens
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Postby The balkens » Tue Dec 16, 2014 1:07 pm

Len Hyet wrote:Hoo boy, this one is gonna be rough.

The Russian currency crashed past 100 against the euro Tuesday, the latest milestone in a currency rout that has rapidly gained momentum despite a huge emergency rate hike from the Central Bank.

One ruble became worth less than one euro cent at 3:13 p.m., according to data from the Moscow Exchange. At the same time, the Russian currency plummeted to 80.1 against the U.S. dollar.

The crash took the ruble's fall Tuesday to 20 percent, the largest one-day currency movement since the financial crisis of 1998 and compounding a 10 percent tumble the previous day.

The ruble later reduced its losses, and at 9 p.m. had stabilized around 8 percent weaker against the greenback at 70 and 11 percent down versus the euro at 89.

The Russian currency has now fallen 55 percent against the dollar since the beginning of the year, making it the worst performing currency in the world in 2014.

"The Central Bank's credibility is in tatters,” said Timothy Ash, an emerging-markets analyst at Standard Bank, in a note to investors Tuesday.

Earlier Tuesday, the ruble jumped sharply, strengthening as much as 10 percent to 58.1 rubles against the dollar, following an overnight announcement from the Central Bank that it was increasing interest rates to 17 percent from 10.5 percent.

But the gains were short-lived, as oil price weakness and sentiment once again intensified pressure on Russia's tumbling currency.

Brent crude dropped below $60 a barrel, reaching $59.02, a level not seen since 2009 on Tuesday.

Prime Minister Dmitry Medvedev convened a meeting to discuss the financial situation Tuesday, according to a government press release.

The gathering was attended by Deputy Prime Minister Igor Shuvalov, Kremlin economic aide Andrei Belousov, Finance Minister Anton Siluanov, Economic Development Minister Alexei Ulyukayev and Central Bank chairwoman Elvira Nabiullina, the press release said.

Ulyukayev said after the meeting a set of measures to stabilize the situation had been discussed, including measures to boost access to hard-currency liquidity from the Central Bank and legislative initiatives to support banks and empower the regulator, according to news agency RBC.

With its largest interest rate hike since the 1990s, the Central Bank bet Tuesday that a higher return on deposits and savings would make the ruble more attractive, easing the pressure exerted by a declining oil price and Western sanctions on Moscow imposed as a result of the Ukraine crisis.

Central Bank chairwoman Elvira Nabiullina said Tuesday that Russians that they should get used to living in a “new zone,” according to an interview on state-owned television channel Rossia-24.

The Central Bank, which has already spent over $70 billion of its foreign currency reserves this year defending the ruble, will likely be forced into market interventions, analysts at Sberbank CIB said in a note to investors Tuesday.

“Meaningful currency interventions must follow the huge Central Bank rate hike,” the analysts said.

Despite speculation of intense political pressure on the Central Bank to try to tame the ruble without frittering away Russia's currency reserves, President Vladimir Putin has not commented on the currency's dramatic recent decline.

The market turbulence was caused by “emotions and a speculative mood,” Putin's spokesman Dmitry Peskov said Tuesday, according to Russian news agency RIA Novosti.

The ruble's tumble in recent days has sparked heavy criticism of Russia's authorities from investors and lawmakers.

"The fall of the ruble and the equity market is not only a reaction to the low price of oil and sanctions but to a distrust of the government's economic measures," former Finance Minister Alexei Kudrin wrote on Twitter in the early hours of Tuesday morning.

Others said that the Central Bank and her chairwoman Elvira Nabiullina had disastrously miscalculated the situation.

"Lack of action had left the stability of the very financial system at stake. I am not sure whether Nabiullina can survive this," analyst Ash said.

“It has only to be a matter of time before the rating agencies respond with ratings downgrades, likely to junk status.”


Siggity Source

This one is gonna hurt people. We're looking at a 1998 style tumble of the ruble, maybe worse. The Russian economy may not be far behind.

Thoughts oh ye armchair economists of NSG? Is the ruble doomed? Will it recover? What's going to happen to the Russian economy?

Me? I'm a little scared. Putin has acted out when the economy has taken a hit before, and with him already taking a big old bite of the Ukraine I'm concerned that a serious hit to the Russian economy might end up with some seriously unforeseen consequences.


I am a little concerned for the vulnerable, like the poor and disabled. But thats the Price you pay for acting like a dog pissing on other dogs territory.

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Fortschritte
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Postby Fortschritte » Tue Dec 16, 2014 1:11 pm

The balkens wrote:
Len Hyet wrote:Hoo boy, this one is gonna be rough.



Siggity Source

This one is gonna hurt people. We're looking at a 1998 style tumble of the ruble, maybe worse. The Russian economy may not be far behind.

Thoughts oh ye armchair economists of NSG? Is the ruble doomed? Will it recover? What's going to happen to the Russian economy?

Me? I'm a little scared. Putin has acted out when the economy has taken a hit before, and with him already taking a big old bite of the Ukraine I'm concerned that a serious hit to the Russian economy might end up with some seriously unforeseen consequences.


I am a little concerned for the vulnerable, like the poor and disabled. But thats the Price you pay for acting like a dog pissing on other dogs territory.


As much as the Russian government sucks, I feel bad for the Russian people who will have to pay for the recklessness and stupidity of Putin's administration.
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Calimera II
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Postby Calimera II » Tue Dec 16, 2014 1:12 pm

Little to do with Putin. It has more to do with speculators that want the rubble to collapse.
Last edited by Calimera II on Tue Dec 16, 2014 1:12 pm, edited 1 time in total.

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Postby Empire of Narnia » Tue Dec 16, 2014 1:13 pm

This would be a good excuse for Russia to go back to the command economy like in the old days.

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Postby Page » Tue Dec 16, 2014 1:14 pm

So take your trip to Russia and drink up the vodka now is the point to take away from this.
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Postby Arkolon » Tue Dec 16, 2014 1:16 pm

Blame Saudi Arabia. Russia's resource-backed economy and currency mean it has volatility levels very similar to that of brent crude.
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Postby Vazdaria » Tue Dec 16, 2014 1:19 pm

Len Hyet wrote:Hoo boy, this one is gonna be rough.

The Russian currency crashed past 100 against the euro Tuesday, the latest milestone in a currency rout that has rapidly gained momentum despite a huge emergency rate hike from the Central Bank.

One ruble became worth less than one euro cent at 3:13 p.m., according to data from the Moscow Exchange. At the same time, the Russian currency plummeted to 80.1 against the U.S. dollar.

The crash took the ruble's fall Tuesday to 20 percent, the largest one-day currency movement since the financial crisis of 1998 and compounding a 10 percent tumble the previous day.

The ruble later reduced its losses, and at 9 p.m. had stabilized around 8 percent weaker against the greenback at 70 and 11 percent down versus the euro at 89.

The Russian currency has now fallen 55 percent against the dollar since the beginning of the year, making it the worst performing currency in the world in 2014.

"The Central Bank's credibility is in tatters,” said Timothy Ash, an emerging-markets analyst at Standard Bank, in a note to investors Tuesday.

Earlier Tuesday, the ruble jumped sharply, strengthening as much as 10 percent to 58.1 rubles against the dollar, following an overnight announcement from the Central Bank that it was increasing interest rates to 17 percent from 10.5 percent.

But the gains were short-lived, as oil price weakness and sentiment once again intensified pressure on Russia's tumbling currency.

Brent crude dropped below $60 a barrel, reaching $59.02, a level not seen since 2009 on Tuesday.

Prime Minister Dmitry Medvedev convened a meeting to discuss the financial situation Tuesday, according to a government press release.

The gathering was attended by Deputy Prime Minister Igor Shuvalov, Kremlin economic aide Andrei Belousov, Finance Minister Anton Siluanov, Economic Development Minister Alexei Ulyukayev and Central Bank chairwoman Elvira Nabiullina, the press release said.

Ulyukayev said after the meeting a set of measures to stabilize the situation had been discussed, including measures to boost access to hard-currency liquidity from the Central Bank and legislative initiatives to support banks and empower the regulator, according to news agency RBC.

With its largest interest rate hike since the 1990s, the Central Bank bet Tuesday that a higher return on deposits and savings would make the ruble more attractive, easing the pressure exerted by a declining oil price and Western sanctions on Moscow imposed as a result of the Ukraine crisis.

Central Bank chairwoman Elvira Nabiullina said Tuesday that Russians that they should get used to living in a “new zone,” according to an interview on state-owned television channel Rossia-24.

The Central Bank, which has already spent over $70 billion of its foreign currency reserves this year defending the ruble, will likely be forced into market interventions, analysts at Sberbank CIB said in a note to investors Tuesday.

“Meaningful currency interventions must follow the huge Central Bank rate hike,” the analysts said.

Despite speculation of intense political pressure on the Central Bank to try to tame the ruble without frittering away Russia's currency reserves, President Vladimir Putin has not commented on the currency's dramatic recent decline.

The market turbulence was caused by “emotions and a speculative mood,” Putin's spokesman Dmitry Peskov said Tuesday, according to Russian news agency RIA Novosti.

The ruble's tumble in recent days has sparked heavy criticism of Russia's authorities from investors and lawmakers.

"The fall of the ruble and the equity market is not only a reaction to the low price of oil and sanctions but to a distrust of the government's economic measures," former Finance Minister Alexei Kudrin wrote on Twitter in the early hours of Tuesday morning.

Others said that the Central Bank and her chairwoman Elvira Nabiullina had disastrously miscalculated the situation.

"Lack of action had left the stability of the very financial system at stake. I am not sure whether Nabiullina can survive this," analyst Ash said.

“It has only to be a matter of time before the rating agencies respond with ratings downgrades, likely to junk status.”


Siggity Source

This one is gonna hurt people. We're looking at a 1998 style tumble of the ruble, maybe worse. The Russian economy may not be far behind.

Thoughts oh ye armchair economists of NSG? Is the ruble doomed? Will it recover? What's going to happen to the Russian economy?

Me? I'm a little scared. Putin has acted out when the economy has taken a hit before, and with him already taking a big old bite of the Ukraine I'm concerned that a serious hit to the Russian economy might end up with some seriously unforeseen consequences.

Edit: For shiggles, here's an opinion piece predicting the collapse of the Russian Banking System because of the freefalling ruble.

A Russian Bank Manager predicts the collapse of the Banking System of Russia.

This is likely due to falling oil prices. Saudi Arabia is trying to hurt the Russian Economy on purpose and its seems as though SA is having success in doing this. While I don't think there is any collapse coming any time soon, this price war will definitely hurt the Russian economy for the next few years.
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Postby Romalae » Tue Dec 16, 2014 1:22 pm

If it turns out that way, it has the potential of being disastrous for the common folk of Russia. You can only squeeze people financially/economically so much before, well, a civil uprising. Russia is no stranger to those.

Probably unlikely to happen, but it's something to keep in mind.
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Postby Weronus » Tue Dec 16, 2014 1:30 pm

I'm going to Russia as a Dutchman in one week, should I be glad or worried?
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Postby Romalae » Tue Dec 16, 2014 1:33 pm

Weronus wrote:I'm going to Russia as a Dutchman in one week, should I be glad or worried?

You should be angry that they shot down your fucking airliner last summer.
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Postby Weronus » Tue Dec 16, 2014 1:35 pm

Romalae wrote:
Weronus wrote:I'm going to Russia as a Dutchman in one week, should I be glad or worried?

You should be angry that they shot down your fucking airliner last summer.

I doubt the average civilian is happy they shot it down.

One man's action does not represent an entire nation's idea about something.
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Postby Nickel Empire » Tue Dec 16, 2014 1:36 pm

Good they deserve it.
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Postby Romalae » Tue Dec 16, 2014 1:37 pm

Weronus wrote:
Romalae wrote:You should be angry that they shot down your fucking airliner last summer.

I doubt the average civilian is happy they shot it down.

One man's action does not represent an entire nation's idea about something.

Yes, I know. I was just being flippant.

You should be fine.
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Postby Imperial Nilfgaard » Tue Dec 16, 2014 1:38 pm

There is a conspiracy afoot to tank the Russian economy by causing oil prices to plummet. It is a plan concoted in Riyadh though I bet the USA is also involved..
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Postby The balkens » Tue Dec 16, 2014 1:40 pm

Imperial Nilfgaard wrote:There is a conspiracy afoot to tank the Russian economy by causing oil prices to plummet. It is a plan concoted in Riyadh though I bet the USA is also involved..


ha ha.

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Postby Weronus » Tue Dec 16, 2014 1:41 pm

Nickel Empire wrote:Good they deserve it.

Who are you referring to with "they"?

The Russian government or Russian people?
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Postby Arkolon » Tue Dec 16, 2014 1:41 pm

Imperial Nilfgaard wrote:There is a conspiracy afoot to tank the Russian economy by causing oil prices to plummet. It is a plan concoted in Riyadh though I bet the USA is also involved..

Honestly, it wouldn't be a terribly surprising conspiracy. What is more likely, however, is that fracking was given a boost by the American governments, in some way or another, so that the bbl production can be closer to that of Saudi Arabia's. Saudi Arabia, being Saudi Arabia, dropped prices to stay the world's number one petrol exporter, to the demise of the rest of OPEC.
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Postby The Rebel Alliances » Tue Dec 16, 2014 1:41 pm

Romalae wrote:
Weronus wrote:I'm going to Russia as a Dutchman in one week, should I be glad or worried?

You should be angry that they shot down your fucking airliner last summer.


I thought Ukrainian Rebels shot that plane down?
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Postby Fortschritte » Tue Dec 16, 2014 1:41 pm

Imperial Nilfgaard wrote:There is a conspiracy afoot to tank the Russian economy by causing oil prices to plummet. It is a plan concoted in Riyadh though I bet the USA is also involved..


And, why do you believe in something so irrational?
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Postby Nervium » Tue Dec 16, 2014 1:45 pm

Weronus wrote:I'm going to Russia as a Dutchman in one week, should I be glad or worried?


Just don't go as a French.
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Postby The balkens » Tue Dec 16, 2014 1:46 pm

The Rebel Alliances wrote:
Romalae wrote:You should be angry that they shot down your fucking airliner last summer.


I thought Ukrainian Rebels shot that plane down?


They are on the Russian Payroll so.....

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Postby Laerod » Tue Dec 16, 2014 1:54 pm

Imperial Nilfgaard wrote:There is a conspiracy afoot to tank the Russian economy by causing oil prices to plummet. It is a plan concoted in Riyadh though I bet the USA is also involved..

Inaccurate. While both Saudi Arabia and the United States are essentially to blame for the drop in oil prices, the idea that they are cooperating rather than competing is ludicrous. Oil prices are dropping because of the increase in oil production in the US. OPEC has declined to reduce production for long-term strategic reasons, on pressure of the Saudis. Given how US oil production is genuinely damaging to Saudi interests, long-term interests in maintaining supplies rather than cooperation with the US to doom Russia are the most plausible explanation.

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Postby Rio Cana » Tue Dec 16, 2014 1:56 pm

Heard on tv that US oil producers would still be pumping oil at round $40 dollars a barrel. That would be bad for Russia and Venezuela. But of course, that's what you get for not diversifying your economy.

But some think this is happening because of the following.

Read this - http://www.examiner.com/article/russia- ... mic-policy
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Postby Kelinfort » Tue Dec 16, 2014 1:56 pm

Imperial Nilfgaard wrote:There is a conspiracy afoot to tank the Russian economy by causing oil prices to plummet. It is a plan concoted in Riyadh though I bet the USA is also involved..

Nah, the U.S. Is an oil producing nation as of late. My guess is Riyadh is trying to strangle Shale oil in America, while keeping Russia and Iran from creating instability.

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