Austin wrote:Rouble is fluctuating too widely , Saw in morning it was 71 then suddenly it was 64 and then 66 ,67 ,68 ........Not sure how it can so widely fluctuate in such a short span of time
We faced issue with Rupee in August 2013 when QE was announced to be abruptly stopped but never faced this wide fluctuation
Very thin, illiquid market ie small volumes.
Earlier in the yr just 25bn USD worth of rubles was trading per day. Thats tiny.
Consider that 4 or 5 TRILLIONS dollars worth of foreign exchange trade occurs per day.
Also, trades are done on margin ie 1 million might buy 50 or 100 million of currency. And these are trades to-ing and fro-ing between big (mainly NATO banks here) all day.
Its probably right that the ruble is now substantially undervalued. But this game is all about bluff and bluster. Cause mayhem in Russia, make Putin unpopular. Try to get a gimp like a new Yeltsin in. I dont think Russian people are falling for it. Infact, it should mean the end for some 5th columnists.
If Russia and America never trade, the exch rate doesnt really matter. Esp if Russia's USD debt laden companies tell America to fuck itself. Russia is a net goods exporter. NATO is a net capital exporter. If America refuses to honour the trade side. Russia must refuse to honour the capital repayment side.