Posted on 04/26/2022 7:36:07 AM PDT by JonPreston
If the sanctions are working, why is the ruble now near or above prewar valuations? The magic comes from capital controls. Near the end of its run, the Soviet Union had a ruble exchange rate where 1 ruble bought ~2 dollars. The Soviet ruble actually appreciated against the dollar from the time of Red October in 1917 to the empire's partial dissolution in the 90's. When a currency isn't traded freely, the regime backing it can set its value to anything it wants. The black market rate for the ruble, however tells the tale the unofficial rate obscures. In 1991, when 1 Soviet ruble bought almost 2 dollars at official money changers, Soviet entrepreneurs would, on the sly and at some personal risk from the law, sell Soviet rubles at 100 rubles to the dollar.
| Date | SUR of the time per USD | USD per SUR of the time |
|---|---|---|
| 1924-01-01 | 2.2000 руб | $0.4545 |
| 1924-04-01 | 1.9405 руб | $0.5153 |
| 1927-01-01 | 1.9450 руб | $0.5141 |
| 1928-02-01 | 1.9434 руб | $0.5145 |
| 1933-04-01 | 1.9434 руб | $0.5145 |
| 1933-05-01 | 1.7474 руб | $0.5722 |
| 1934-01-01 | 1.2434 руб | $0.8042 |
| 1935-01-01 | 1.1509 руб | $0.8689 |
| 1936-01-01 | 1.1516 руб | $0.8684 |
| 1937-01-01 | 5.0400 руб | $0.1984 |
| 1937-07-19 | 5.3000 руб | $0.1887 |
| 1950-02-01 | 5.3000 руб | $0.1887 |
| 1950-03-01 | 4.0000 руб | $0.2500 |
| 1960-12-01 | 4.0000 руб | $0.2500 |
| 1961-01-01 | 0.9000 руб | $1.1111 |
| 1971-12-01 | 0.9000 руб | $1.1111 |
| 1972-01-01 | 0.8290 руб | $1.2063 |
| 1973-01-01 | 0.8260 руб | $1.2107 |
| 1974-01-01 | 0.7536 руб | $1.3270 |
| 1975-01-01 | 0.7300 руб | $1.3699 |
| 1976-01-01 | 0.7580 руб | $1.3193 |
| 1977-01-01 | 0.7420 руб | $1.3477 |
| 1978-01-01 | 0.7060 руб | $1.4164 |
| 1979-01-01 | 0.6590 руб | $1.5175 |
| 1980-01-03 | 0.6395 руб | $1.5637 |
| 1981-01-01 | 0.6750 руб | $1.4815 |
| 1982-01-01 | 0.7080 руб | $1.4124 |
| 1983-01-13 | 0.7070 руб | $1.4144 |
| 1984-01-01 | 0.7910 руб | $1.2642 |
| 1985-02-28 | 0.9200 руб | $1.0870 |
| 1986-01-01 | 0.7585 руб | $1.3184 |
| 1987-01-01 | 0.6700 руб | $1.4925 |
| 1988-01-06 | 0.5804 руб | $1.7229 |
| 1989-01-04 | 0.6059 руб | $1.6504 |
| 1990-01-03 | 0.6072 руб | $1.6469 |
| 1991-01-02 | 0.5605 руб | $1.7841 |
| 1991-02-13 | 0.5450 руб | $1.8349 |
| 1992-01-01 | 0.5549 руб | $1.8021 |
Pure wind since the ruble, today, is stronger than it was before your president began sanctions.
Yeah the thing about all these illegals coming across our border and being flown in from God knows where, is that what’s gonna happen when they find that there isn’t no work here that essentially as a country we are broke
Russia is the largest commodity exporter in the world - grain, fertilizer, timber, gas, oil, various metals. They export stuff people need and are going to continue to need. If one group of people - eg the West, refuse to buy their exports, others will happily do so instead. So the oil previously going to China from the Middle East will now go to Europe and the Russian oil previously going to Europe will go to China. Net effect? Negligible for Russia. The cost to obtain certain commodities will go up for Europe and America though.
Jon Preston
Pure wind since the ruble, today, is stronger than it was before your president began sanctions.
It's not. Before sanctions were imposed on your president, the ruble was traded freely - the official rate was the same as the rate on the street. Today, the Russian ruble is like the Soviet ruble - a Potemkin currency where the official rate and the rate on the street are very different. As Reuters discovered, even Russian banks, never mind small time foreign exchange booths, are diverging from the official exchange rates:
Despite remarkable rouble gains on the Moscow Exchange, banks are offering to sell dollars and euros at different rates. On Friday, the largest lender Sberbank was selling dollars and euros online for 79.8 and 85.1 roubles, respectively, compared to an official rate of 76.25 and 83.29.
Some exchange offices are still selling cash forex for roubles despite the official ban, but at a different price.
Within a short walking distance of the Kremlin, an exchange office behind an unmarked door offered to sell cash dollars for 93 roubles and euros for 103 roubles on Thursday.
A man behind bulletproof glass in the office explained the gap between its prices and the rouble rate on the Moscow Exchange by “the need to make some money”.
And this is with Russian central bank rates of 17%, almost 10% above where they were prewar. For reference, the current targeted Fed funds (aka US central bank) rate is now 0.25%-0.5%.
You don't have to take my word for it. You could purchase rubles on the black market and wait for it to appreciate. While I can't recommend this bet, it does cater to the possibility that Russia comes out of this with a stronger currency
Let's hope he doesn't discover how to use html to make his letters even bigger...
A currency can be stronger or weaker in relation to some other currency, or to a basket of currencies. The article cites the ruble in relation to the dollar. That means that fewer holders of the dollar are buying rubles. It doesn’t mean that the ruble is stronger than the dollar.
To add a little bit of intellectual honesty, the article should quote the ruble in relation to the average of many other currencies. But it doesn’t. So the article tells us very little of anything that is useful.
Thanks Zhang Fei.
The article compares rubles to dollars in that the USD is the world's reserve currency. That's it. There is no discussion of the holders of rubles.
He's a Karl Rove Republican.
You nailed it exactly.
“They have no correction mechanism and will never accept failure of their blinkered world-view. “
There is a correction mechanism that they are blind to. But it will devastate the American people while it roots them out. It will take another Great Depression or a nuclear war before normal people start to ask *what the hell* went wrong.
“If Ruble is so strong, maybe RuZZia should end capital controls and let foreigners sell their stock holdings?”
They probably won’t do that as long as have impounded 650 Billion of their gold and currency deposits and cut them off from swift. Why would they?
“If Ruble is so strong, maybe RuZZia should end capital controls and let foreigners sell their stock holdings?”
They have a bit more to go, but they’ve unwound most of the protective measures they took.
The bigger concern for them is spending the billion or so dollars flowing into Russia, daily, due to energy and other exports. If they’re not able to spend it fast enough, it makes their currency stronger than they want it to be.
It is not about if you can put a gold coin in you hand. It is that the Ruble is pegged to a fixed amount of gold and no longer floats on a whim. It cannot be inflated away now.
“Pure wind since the ruble, today, is stronger than it was before your president began sanctions.”
JP, Interesting here is the accidental admission that the President of the United States is Zhang’s president but not yours.
“The guy you’re talking to actually believes that there was minimal vote fraud in Texas in 2020...”
That is VERY INTERESTING...so now that takes care of him being on our side.
I’m surprised JR allowed this site to be infected with people like him and I guess we’re wasting our time debating him, as he’s obviously on assignment here, as this is NOT a NeverTrumper site.
“(The ruble) cannot be inflated away now.”
Sure it can. It’s called ‘debasing’ the currency. Russia can gin up all sorts of rubles if they so desire. They can peg the value too. And the Russian black market will respond accordingly just as it always did.
Seriously, let’s say Russia has 30 metric tons of gold on hand. They generate x number of rubles against it and declare that it’s backed by gold.
Great.
There’s still nothing stopping them from generating (xy) number of rubles and declaring that they’re all just as good as gold (so long as you don’t try to redeem them for gold).
“JP, Interesting here is the accidental admission that the President of the United States is Zhang’s president but not yours.”
Yep, I’m a Russian plant too, since I also oppose Biden.
BRILLIANT detective work, on your part. I guess I’ll be heading back to Lenin’s Tomb for dinner, rather than posting here tonight.
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