Posted on 11/10/2014 9:58:58 AM PST by Olog-hai
With the Russian ruble in a nosedive under the pressure of Western sanctions and slumping oil prices, the country’s central bank decided Monday to freely float the currency in markets and stop regularly spending billions in a vain attempt to stem its fall.
The bank has been burning through its reserves, which plunged from $510 billion at the year’s start to about $400 billion now, to soften the drop in the ruble, which has lost about half its value since the beginning of the year as investors pulled money out of Russia and the economy headed toward recession. It spent $30 billion last month alone—an unsustainable rate.
On Monday, the central bank said it would let the market decide what value to give the ruble, which touched a record low of above 48 to the dollar on Friday. It also warned, however, that it would be ready to intervene if necessary to maintain financial stability.
A free float could see the ruble depreciate further in the longer term, stoking inflation and other economic problems for Russians. But investors welcomed the central bank’s move as a necessary step protect the nation’s hard currency reserves and curb market speculation. …
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Is a currency war on the horizon?
I would ask..... is there a currency war now
Putin needs to ask himself if Ukraine is worth it.................
By his recent words and actions, anything for the “Eurasian Union” is worth it.
Saving his one warm water port NATO tried to take from Russia? Probably.
Is it still illegal to bring greenbacks into Russia, like in the old Soviet Union?
IIRC, greenbacks were tolerated if they circulated under the table. In either era the U.S. dollar bought rubles at a much higher exchange rate than the official rate.
Whatever became of the old silver ruble? Those circulated in the USSR until well after the Bolshevik revolution. Silver rubles were worth more than paper rubles; an old peasant saying went,
“A thousand in paper, or eight hundred in silver, and the cow is yours.”
It is not. You can take them in and freely exchange them for roubles or spend them if someone is willing to accept them. No one ask you how much currency you are carrying either.
I was deployed to Uzbekistan 10 years back. On trips to the local bazaar we were encouraged (not ordered) to exchange our greenbacks for the local “soum” at about 970 soum to the dollar.
As it turned out merchandise cost less if you paid in soum. The exchange rate was favorable to help keep greenbacks off the black market.
Now, back in Vietnam it was illegal for GI’s to possess greenbacks; we were paid in scrip (MPC’s). But in Thailand, greenbacks were everywhere.
I met a Uzbeki in Chelybinsk. He was a Russian national born and raised in Uzbekistan and he hosted me at his restaurant that was ethnically correct. The food was great though I didn’t care for the boiled horse.
Foreign currency does not used to trade merchandise in Russia, in the same way as you aren’t use Australian dollars in American stores.
Anyway it is not a big problem because every bank has exchange window and you can change rubles to dollars and euros and back easily. I might be wrong but they might be registering transactions of over $10000 so if you need to change more and stay anonymous you might have to do it twice or more.
On the other hand, unlike 1990s plastic money are more popular and many banks allows exchange online so it is not popular to hang around with cases of money anymore.
I met Uzbek girls who were ethnically Russian. No matter; if you’re born & raised in Uzbekistan, you’re an Uzbek.
I met an Uzbyechka who was ethnic Korean. Later I learned how North Koreans were sent to the USSR as slave labor for Stalin.
The Uzbek translators shared their no’on bread & chai with me. Our messhall sometimes offered `plov’ & I had shashlik during a trip to Samarqand. Don’t recall horse on the menu, tho.
After our stupid State Department provoked Karimov into shutting down the base at Karshi-Khanabad, one of the interpreters emailed me that she & her family were in hard times.
I was able to wire money through Western Union to them in Tashkent (where they call it Zapadnye Soyuz).
IMO, WU is not the best way to wire money. Commission is way too expensive.
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