Russian Economy General News: #3

It will not work but they can't do anything else anyway just wait for the first weakies to collapse. Probably in Africa and South America.
Nevertheless might need to try something radical soon enough.

Hannibal Barca wrote:It will not work but they can't do anything else anyway just wait for the first weakies to collapse. Probably in Africa and South America.
Nevertheless might need to try something radical soon enough.

So why they do it then? Seems so pointless as it does more harm than good.

For the reason I gave you as an example earlier. Because interest rates have to exceed depreciation rate else I will liquidate and go straight to the Swiss banks....

Hannibal Barca wrote:For the reason I gave you as an example earlier. Because interest rates have to exceed depreciation rate else I will liquidate and go straight to the Swiss banks....

I see your point. Someone on zerohedge are saying that it is essentially another way to snuff out bad loans/business. I dunno though. I know many who suffered during 18 - 20% interest rates here in Canada. All loans will now have to come from China or India or alike. Or Government will only hand out loans from venture funds and what not at their preferred rates and you will have to be damn lucky to get that unless you manufacture what they demand.

Lets see how the CBR will play it.
No doubt that this will damage the investment and diversation process in Russia.
Here, on this topic i found that the gouverment is planning special funds/credit lines with lower rate for medium and big companies.
Is that true?

Can we suspect that the newest 17% rate from CBR is a game against the speculators?


If the people go out that will be bad for Russia, cz the devil knows how to plays maidan scenario.
The western media just waits for that kind of pressure to show inside of Russia.
We should bare that in mind too.


Russians should stay calm, if the rubble go down(which already did) the CBR after some period should lower the rates.

OK, why not just tie ruble to something then?  Instead of doing all of this, then why not just do what China does and have the currency tied to something and voila, problems of devaluation goes away.  Tie it to Yuan, like for every 1 Yuan, there is 6 Rubles.

Maybe someone can answer this, because I cant. My wife asked why its value is so low yet Ukrainian Hyrvina and Belarussian Ruble is higher in value? My answer is speculators clearly attacking the Russian currency. But I am not entirely sure what is going on to the currency. Because it really does strike me odd that a country that produces more than both those countries combined, and has a trade surplus, ends up with a lower valued currency.

They already tied it to oil. Is more than obvious and rightly so. They can't tight it to yuan is way too strong.

Hannibal Barca wrote:They already tied it to oil. Is more than obvious and rightly so. They can't tight it to yuan is way too strong.

I thought it was free floating? Speculators tied it to oil. How come they cant tie it to anything else?

Anyway, they need to tie it to something to increase its value, this is getting ridiculous. Or let it collapse further but interest rates being really high isn't really good for development.

If CBR let you believe that speculators did this then thy did a good job
Oil accounts for 70% of Russian exports aka with 70% of Russia's interaction with the world.
Tuning ruble to optimize this transaction is essential for the moment.

If you think so.  Cause Belarussian Ruble and Hyrvina is worth more than Ruble.  Don't know how that is any better.  And there is growing panic in Russian media over it.  So if there is growing fears, then obviously this isn't a smart move, now is it?  yeah, didn't think so. If it is the case, then why bother raising interests anyway to "strengthen" the currency if it is tied to oil as you say? Makes very little sense, cause it goes in contrary what you are saying. Might as well keep interests low in hopes that investments will come in to battle the export.

Devaluation is no taboo. The _SINGLE_ reason why Eurozone is a living hell is because we can't devaluate.
Belarussia and Ukraine are no oil exporters.... Ukraine would dream to devalue anyway but Zionists will not let them of course they have to play dollar's game now.
CBR should control interest rates and bond market and stock prices because she needs to devalue controllable the Ruble for as long as oil depreciates and in the
same time control capital outflow and look strong and committed so that no panic breaks in the public.
It's a two front waiting game, a tactical retreat, Putin was right on spot when he parallelized it with the Great Patriotic War.

I am curious. Is it really the sign of major economic problems to come if oil prices are down, and so are the consumption from domestic users? What I am getting at is that it was speculated that they (oil companies) would make more from the local demand for petrol would rise as prices sink. Yet, as prices sank, the sales have been down quite a bit at the pump. Do you guys see this as a sign as well? Zerohedge folk do.

There is a substantial chance that 2015 will be a new major global crisis.

Hannibal Barca wrote:Devaluation is no taboo. The _SINGLE_ reason why Eurozone is a living hell is because we can't devaluate.
Belarussia and Ukraine are no oil exporters.... Ukraine would dream to devalue anyway but Zionists will not let them of course they have to play dollar's game now.
CBR should control interest rates and bond market and stock prices because she needs to devalue controllable the Ruble for as long as oil depreciates and in the
same time control capital outflow and look strong and committed so that no panic breaks in the public.
It's a two front waiting game, a tactical retreat, Putin was right on spot when he parallelized it with the Great Patriotic War.

OK, thank you for the explanation. Now, what are ways Russia can do to fix the inflation rate for products? I know that prices for Yotaphone are not increasing because the company is taking a hit at the profit margins (since most of the components for it are from Singapore). So what are other ways? Next year, T-Platforms will be releasing their own produced ARM processors so I imagine, over time, it will reduce costs of electronic gadgets in Russia (mobile devices at least) since more domestic companies (hopefully, no guarantee) will use that rather than the alternative from China (since it would be cheaper). Pretty much, import substitution would help fight it. But, no matter how hard Russia will try, they will not be able to make everything, only key items (computers, software, mobile gadgets, semiconductors, etc) and the rest will definitely need to be imported from other countries. So what are some ways to fight this? Now that Ruble is on part with Rupee at the moment, it will make trade cheaper for these two countries. Unless Ruble drops more and then will go to being expensive for Russia.

There needs to be other methods to fight inflation other than currency value....

What America Does Not Understand About Russia & Oil

A good read.

Unfortunately not many things can be done against inflation. The critical is the wages to follow inflation and the unemployment to stay low.
If this happen and for the moment is happening, then it's a sign that market has enough volatility.
Such scenario will not be terrible for the average worker it will be bad for those having deposits and for the high end which will try to send capital abroad.
This must be convinced or subsidized or threatened ( ) to re-invest domestically and keep money velocity. In stock market like USA did if there is no other way.

Holy God I wake up to 17 % interest rate news , Guess this is to starve of inflation.

Not sure if this will prevent fall of rouble.

God Bless Russia

So why is Rouble falling more rapidly then other currency from OPEC or Canada or Norway ? Why arnt speculators attacking those currency ?

Something seems sinister here , some one is attacking Russian Economy

My question was not related to your post above it.

I just wonder lets say hypothetically if Rouble Reaches 100 how will it affect the life of Ordinary Russians ?

Will it lead to collapse of Russian Economy in some ways ?

Of course it will. Prices go up. Savings are wiped out. Wages don't adjust quickly enough.

This is why i don't believe in the conspiracies theories about the Russian central bank,
of wanting to "sabotage russia" economy and in "bed with the IMF".  Why i was skeptic
about VineSaker interviews with so called "Putin Advisors" and experts..

Take a look at what the former Economic Minister of Putin ,which he called at one time
"the best economist in the world".. told about central bank recent decisions about increasing interest rates.

http://itar-tass.com/en/economy/767130

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MOSCOW, December 16. /TASS/. Russia's former deputy prime minister and finance minister Alexey Kudrin said the central bank made the right move hiking the interest rate from 10.5% to 17%. “The Central Bank’s decision to raise the rate to 17% is a forced one but correct decision in the current conditions,” Kudrin wrote in his Twitter account.

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So there you have it.. from the horse mouth.. i was sure Putin is not an idiot.. and will allow
a central bank to destroy Russia without him doing anything.. Basically his comments confirm that what the central bank is doing is in line with what Putin favorite economist will do. Probably
Russian government prefer that the billionaires who goes abroad to make their money , be sacrificed instead of the average Russian citizen. Central bank is now saying they will be in 2015 allowing the Ruble in free float mode... and only focusing in countering the inflation.

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TR1 wrote:Of course it will. Prices go up. Savings are wiped out. Wages don't adjust quickly enough.

I suspect the entire Armament program would go for a toss of Rouble does not show healthy recovery in a years time.

How would savings be wiped our if they have 9 or 16 % interest rate , they are not in ZIRP unlike US