It takes more and more Russian rubles to buy a US dollar so although the chart looks up, that’s a huge decline in the ruble.
And it’s worse than it looks. Bloomberg has it close to 118 rubles to the dollar, not 104.
Ruble Liquidity Vanishes
Bloomberg reports Ruble Trader’s Day Reveals Liquidity Is Vanishing Everywhere
Spreads on the ruble have widened by eight times, with market makers from Sydney to Hong Kong pulling back, traders said. The currency was indicated 26% lower in offshore trading as the sanctions placed on Russia and its central bank ratchet up concern over the ripple effects.
“No trades are coming through at all on the ruble,” said Nick Twidale, chief executive Asia Pacific at FP Markets in Sydney. “When anything like this happens, we cut leverage and basically tell people to close positions. It’s just too high risk.”
CME ruble futures tumbled more than 30% after the open, though some trades are now starting to trickle through, according to Matthew Simpson, senior market analyst at City Index.
“The ruble is in a freefall as the gravity of sanctions and restrictions on Russia’s central bank take effect,” he said. “CME futures fell over 30% after the open, which is not what Russians who are queuing up at cash points across the country want to hear right now.”
Russian Inflation
Lighthearted News of the Day
https://twitter.com/AmySpiro/status/1498085663786344452
More US Dollars Needed
Russia need to pay dollar-denominated debt but cannot because Russia is now barred from the SWIFT payment system.
The SWIFT Ban on Russia Means the Fed May Need to Ready Dollars
The decision to exclude various Russian lenders from the SWIFT messaging system could result in missed payments and giant overdrafts within the international banking system, and spur monetary authorities to reactivate daily operations to supply the market with dollars.
“Exclusions from SWIFT will lead to missed payments and giant overdrafts similar to the missed payments and giant overdrafts that we saw in March 2020,” Credit Suisse Group AG strategist Zoltan Pozsar said in a note. “Banks’ inability to make payments due to their exclusion from SWIFT is the same as Lehman’s inability to make payments due to its clearing bank’s unwillingness to send payments on its behalf. History does not repeat itself, but it rhymes.”
And the upshot from that is that the Federal Reserve, which has been paving the way to start shrinking its balance sheet through so-called quantitative tightening, might actually expand it again first, according to Pozsar.
This post originated on MishTalk.Com.
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Mish
people getting sick now and dying from covid are younger un-vaccinated
people in rural areas who had poor health at a baseline.”
those who are cold and are not clothed.
This world in medicine is not spending money alone. It is spending the sweat of
its laborers, the genius of its scientists, the hopes of its children…
This is not a way of life at all, in any true sense. Under the cloud of
threatening disease, it is humanity hanging from a ventilator tube.
I know it looks like gold isn’t rising much, but since the dollar has been rising that has hidden much of gold’s recent rise has it not?
Is there a chart anywhere that shows the rise of gold compared to other currencies? If there is I cannot find it.
The Russian Government is in trouble. Anytime you make it harder for your citizens to put food on the table you come closer to some sort of revolution. It requires increasingly higher levels of oppression to remain in power until it fails.
There is no way Russia comes out of this with Ukraine. They may take it for a time, but the financial repercussions will destroy them. I watched several of the European parliaments debates on this matter and it was remarkable for how unified everyone was. Sanctions will not go away until Ukraine is returned whole (including Crimea).
There should now be no doubt Putin has gravely miscalculated, not that I expect him to admit it.
I predict China is going to start backing away soon and will begin to make clearer statements against what is happening. While they may have initially kind of hoped for a quick success they will want no part of being identified as supporting a failing regime.
With inflation, even if food is produced locally, costs to put food on the table rise.
If Russia ceases to attack Ukraine, and sanctions are lifted, you will make a fortune. If sanctions continue and Russia collapses economically, you will lose everything.