Viewing 34 posts - 1 through 34 (of 34 total)
  • The collapse of the Russian Rouble
  • ohnohesback
    Free Member

    Will it destabilise Russia?

    Will this be the nudge which pushes the global economy still further into the mire?

    If Russia perceives this to be an act of economic warfare against it by the West, will there be a military response?

    And don’t get too smug looking on at their problems; I predict a devaluation of the pound in the aftermath of the general election next year.

    leegee
    Full Member

    They are frozen out of the international credit market and have huge debts they need to refinance soon. Not being able to borrow more they will probably default in part if not fully, then it becomes everyone elses problem.

    jon1973
    Free Member

    If Russia perceives this to be an act of economic warfare against it by the West

    Sanctions are only one part of the problem. Nearly 70% of Russia’s exports come from oil, which looks like it’s going to drop down to below $50 when Putin was budgeting for $100.

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    pedroball
    Free Member

    Yes to all of your questions, and a Happy New Year!

    pedroball
    Free Member

    The more I listen to economists and politicians these days, the more I think there isn’t a solution – China slips a little in growth year on year (or rather growth is lower than that required to keep up with population growth) – that suppresses oil demand (exacerbated by shale gas in the US) and that affects Russian exports, which adds to political pressure on Putin, which adds further political instability in Western Europe. That reduces imports from China….

    Meanwhile, the UK is looking at 11% share of spending being on just financing the debt, based on optimistic projections, factoring in forecast budget cuts, that will have structural impact.

    We talk about kicking the can to the next generation, but I think we’re just kicking the can over the cliff.

    mt
    Free Member

    Russia does not have huge depts. They have over $400bn in the bank and what debt they have is in Rubles, that helps a lot. Some of there big companies have large $ debts which is an issue, they are also suffering capital flight (for a while), hence the high interest rates. Yes it is really bad for them, not least inflation. However those that should be concerned are us, we are not independent from what happens there.

    On a high note, there be a reduction in Russians buying houses in London (possibly).

    Gotama
    Free Member

    The strange element in all of this is that Putin is apparently more popular than ever in Russia. Consumers that have disposable capital are out buying up goods ahead of the impending price rise.

    http://zyalt.livejournal.com/1227012.html

    Inflation already hit 9% in November with it expected to rise significantly in the new year.

    So far the central bank has looked a little out of its depth but in fairness they are trying to bail a sinking ship given how dependent the country is on oil.

    So yes, they are somewhat bejiggered but as a nation they are used to hardships and whilst the support is still there for the supposed ‘strong man’ they will either go on the offensive or just battle through it I suspect.

    teamhurtmore
    Free Member

    Yes, yes, no (but plenty of noise to distract attention)

    Very destabilising and real thrust of defaults if this continues – Rosneft deal is very messy.

    Russia missed its opportunity to modernise its economy and this is now being horribly exposed

    The West (Germany?) does need to think about how to help Russia re engage. A cornered, wounded bear is a dangerous beast.

    binners
    Full Member

    Lots of European leaders seem to be rubbing their hands with glee at the prospect of the Russian economy collapsing. Which just goes to show how totally detached from reality they are.

    The Euro-zone economy is still an unresolved mess. And they’ve all still got their heads buried in the sand in Brussels, apparently clueless as to what to do about the new economic reality, as well as being in denial. And one of your neighbours going into financial meltdown, especially one with a messianic, shark-wrestling nut-job at the helm, is only going to have one result.

    The worst-case-scenario’s are not good at all.

    martinhutch
    Full Member

    Economic failure for Putin makes it more likely he will shore up his popular support in other ways. Which is very bad news for eastern Europe. Political instability tends to increase oil prices, so it is in Russian interests for middle east conflicts to continue and intensify.

    Gideon gloating over the mess that is the Russian economy for the benefit of a stateside audience shows the kind of immaturity and folly that we’ve come to expect from the European political class.

    binners
    Full Member

    On a high note, there be a reduction in Russians buying houses in London (possibly).

    Surely the opposite will apply? If you’re currency is devaluing at a rate of knots, then you’ll be looking for a safe overseas haven for it. Maybe thats why Gideon is looking so smug? More dodgy oligarchs funnelling yet more laundered loot into Londoninium, to re-turbo-charge the property market, just as it looked like some reality might be intruding on proceedings

    BillMC
    Full Member

    If Russia needs oil to be $100pb and currently it’s $50 then if the ruble declines 50% against the dollar and oil is paid for in $s then problem solved! Seriously though, it is all destabilising as witnessed by the fluctuations on the British stock market yesterday. Might be time to start looking at property in Moscow.

    doris5000
    Full Member

    If Russia needs oil to be $100pb and currently it’s $50 then if the ruble declines 50% against the dollar and oil is paid for in $s then problem solved!

    you jest but there are graphs floating around that plot oil price vs rouble rate this month, and they tally up almost exactly…

    mrchrispy
    Full Member

    Isnt it OPEC pushing the price of oil down by keeping production levels up? If the Russians start to kick off I suspect they’ll be wearing desert cammo

    J-R
    Full Member

    Not OPEC, but Saudi pushing the oil price down. That’s half the problem. The other half is the western sanctions. They might struggle through either in isolation but both together are giving them a hard time.

    Why are the Saudis pushing the oil price down? Who knows, there are plenty of good theories, including to punish Russia for supporting Syria.

    bikebouy
    Free Member

    Should be good for the FX traders.. 😉

    footflaps
    Full Member

    They have over $400bn in the bank and what debt they have is in Rubles, that helps a lot

    Allegedly, although most economists reckon it’s a lot less than $400bn as they have lent money to banks which probably can’t pay it back.

    Some people argue that Russia’s reserves are so big that they can accommodate such demands and weather the economic storm. But the central bank exaggerates the reserves at its disposal. About $170 billion of its assets sit in two giant wealth funds, the Reserve Fund and the National Wealth Fund (NWF), and much of what is in these funds could prove illiquid or inaccessible if called on to meet short-term financing needs. Cash from the $82 billion NWF is committed to long-term infrastructure projects, says Sergei Guriev of Sciences-Po, a French university. The NWF has also provided money to VEB, the Russian development bank, to finance construction at the Sochi Olympics. The loans by which it did so have been “restructured” to allow delayed repayment. Mr Guriev says many people believe the money to have been embezzled. The NWF may thus be unable to offer any liquidity to the government.

    http://www.economist.com/news/briefing/21633815-russias-official-reserve-figures-overstate-funds-it-has-its-disposal-not-quite-all-there

    On a high note, there be a reduction in Russians buying houses in London (possibly).

    Most Rich Russians took their money out of Russia years ago and it’s all in Euros/Dollars or Gold, so they won’t be affected at all.

    Edukator
    Free Member

    Buy Rubles now.

    Edit: 85 to the Euro is the line in the sand traders have been quoting in the media for a while.

    bikebouy
    Free Member

    ^^ shhhhhhh 🙄

    globalti
    Free Member

    Not only Russia but also Nigeria where the Naira has devalued against the USD by around 10%. Not dramatic yet because most importers have to buy Dollars, with which to buy Sterling with which to import from the UK and at the moment they are buffered by the weak Sterling to Dollar rate. If that moves back to former levels though, Nigerians will be facing inflationary pressures for the first time in many years, the Nigerian CB having succeeded in holding the Naira rate steady until now.

    92% of Nigeria’s revenue comes from petroleum.

    footflaps
    Full Member

    92% of Nigeria’s revenue comes from petroleum.

    They’re also our biggest customer!

    Inbred456
    Free Member

    The Saudis are pushing the price down to try and finish off a lot of the small suppliers that need to get circa 80 dollars a barrel.

    hatter
    Full Member

    I think you’ll find the Saudi’s are more worried about the US Shale Oil revolution than anything to do with Russia.

    Shale is comparatively expensive to exploit (using current methods) so by forcing the oil price down you render it uneconomical to open new wells, discourage investment in new technology and push current producers to the wall.

    It’s a bit of a short term view as that genie is now out of the bottle and only by selling oil on the cheap will the Saudi’s keep it pinned in a corner.

    However, there’s also the small matter of the Saudis’ main long-term geopolitical objective which is containing Iran’s ambitions to become the regional hegemonic power. Iran needs $131 dollars a barrel to balance the books, has a large population and very little foreign currency reserves. Saudi needs just $104, has a third of the population and vast currency reserves.

    Russia’s woes are just a little Brucie bonus for the Saudis and if you think the Russians are hurting, keep an eye on Venezuela.

    jambalaya
    Free Member

    The US and EU will soon sign new sanctions against Russia. This is far from over. Russia is facing economic meltdown. IMO the West is calling Putins bluff. Russians arent buying Western goods(eg cars) as a sign of strength they are doing so as they know soon the prices will be much much higher. Its indicative that Apple has stopped selling in Russia full stop as they don’t know how to price goods. Annecdotally French news is full of stoiries of Russians cancelling ski holidays, some resorts report they will be 30% down on visitors if other nations dont take up the slack. Have heard this direct from hotels in the resorts as we are in the Alps this week.

    Edukator
    Free Member

    Russians aren’t the only ones not going skiing over the festive season, there’s hardly any snow, which is being reported on all the cable new channels.

    ohnohesback
    Free Member

    So how does Russia respond to this latest provocation by the west?

    I don’t think it will be nicely…

    Hobster
    Free Member

    By forging closer links with China following on from its gas deals denominated in domestic currencies.

    binners
    Full Member

    Russians aren’t the only ones not going skiing over the festive season, there’s hardly any snow, which is being reported on all the cable new channels.

    Thats a shame 😆

    Edukator
    Free Member

    Excellent, binners, you’ll forgive me for nicking that to post on the ski thread.

    ohnohesback
    Free Member

    The alternative links with China are a given. With Russian raw materials and Chinese capacity, together they would make a formidable trading bloc – which the West would antagonise at its peril.

    Edukator
    Free Member

    Well if you’d bought Rubles in the hours that followed my “Buy Rubles now” post and sold now you’d have made 15%. I didn’t. 🙁

    badnewz
    Free Member

    I think Russia has learnt the mistakes from the 90s crisis period, and on the whole it is a far stronger country (the economy is 10 times bigger than in 91 for a start), with a far stronger leader. Putin will do whatever it takes to stabilise the currency, but in the longer term they need to encourage the small business sector and get Russians reproducing, as they are a dying people.

    binners
    Full Member

    I think Russia has learnt the mistakes from the 90s crisis period

    What? Try and stay off the vodka while running the country? 😆

    [video]https://www.youtube.com/watch?v=v9YnDirqwT4[/video]

    binners
    Full Member

    The Mash 😆

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