Post: #101

It's at 64,24 right now on Google

Post: #102

Ruble fell 9% today against the US Dollar, a MASSIVE move in the currency markets. Currencies don't usually move like this in such a short amount of time, in finance circles this is a crash. Google, Adobe, and Microsoft are now pulling employees out of Russia too. At this point you have to wonder where the floor is, honestly USD/RUB 80, is that even possible?

As I type this, USD/RUB 65.6238

Post: #103

^The floor is when oil stops falling. When oil stops dropping, the ruble will stop dropping.

Post: #104

(12-15-2014 01:19 PM)zatara Wrote:  Even if prices adjust upwards due to inflation with a 50%+ devaluation in the currency the country can't fail to get cheaper for tourists, though.

ie if an average beer was 200 rubles in St Petersburg last year as of today thats only 2.50eur. A year ago it would have been equivalent to 5eur. So the cost for me, as a Euro user, to go on a night out in St Petersburg has effectively halved... That is unless inflation is running at 100% per 12 months (and a beer now costs 400 rubles) which I don't believe it is? Going from your location flag I'm guessing you'll have first hand experience though?

Inflation is calculated on very basic items - electricity, water, potatoes, milk, bread, etc. Most of what you see in supermarkets is imported. Even when local items can be found, they're usually of very low quality. As a result, almost everything that you will find in hotels and bars is imported.

There are some local beers which are acceptable (Tuborg and Carlsberg), but they are brewed under licence and the fee is probably probably set in Euros.

Hotels and other accommodation are usually very slow to adjust, because:
- the short-term market is priced in Euros
- financing (both residential and commercial) is very often in Euros, Dollars or Swiss Francs
- hotel management and branding contracts are set in foreign currency

Also, airfares are fixed in Euros, as are Russian consular fees.

Even one month ago, when the USD/RUB rate was ~ 45, the price of bottled water (BonAqua, Aqua Minerale, etc.) had increased by about 20%. In theory there shouldn't be any change because it's a completely local product. But there are indirect forces involved (eg. simply being the local arm of multinationals like Pepsi and Coca Cola), so the price is increased anyway.

So I would say only around 1/3 of a tourist's expenses will be subject to this devaluation. Maybe 1/2 if you're a very low-budget traveller.

Post: #105

bankers trying to get rid of putin
hold in there vlad

Post: #106

Russian Central Bank just raised rates from 10.5% to 17%. That is an insanely desperate massive move to try and save the currency. At this point, I don't think it is outlandish to say that their currency is in the process of an all out collapse and even if oil stabilizes/recovers the Ruble may be too far gone to save. The full pain of a currency collapse takes a few months to work its way throughout the economy.

In addition, the RSX options traded 16.5% calls (betting it will go up) vs 83.5% puts (bets it will go down) today at 610% of the normal daily volume. Lots of people and lots of money betting that things get much much worse.

Post: #107

(12-15-2014 05:23 PM)MichaelCorleone Wrote:  Russian Central Bank just raised rates from 10.5% to 17%. That is an insanely desperate massive move to try and save the currency. At this point, I don't think it is outlandish to say that their currency is in the process of an all out collapse and even if oil stabilizes/recovers the Ruble may be too far gone to save. The full pain of a currency collapse takes a few months to work its way throughout the economy.

In addition, the RSX options traded 16.5% calls (betting it will go up) vs 83.5% puts (bets it will go down) today at 610% of the normal daily volume. Lots of people and lots of money betting that things get much much worse.

Saving my pennies. Only thing is I don't think I would ever feel comfortable owning real property in Russia. So At some point if I made a trade for rubles it would be for a long vacation.

Post: #108

At least the Russians seem to be (somewhat) taking it in good humour:





This one's actually pretty funny:





USD/RUB now at 65.61.

HSLD

Post: #109

It's not oil. Ruble was down 10% today and oil barely budged. It's a full out currency crisis, decoupled from fundamentals.

The rumor is that Rosneft's $10 billion in rubles bond auction last week has now been deployed to buy dollars on the Russian market. They have $10 billion in foreign loans coming due this month, and no where to find dollars due to sanctions.

Крым наш.

Crimea is Russian, but payback's a bitch.

Obama and Merkel starting to look like foreign policy geniuses, and Putin can no longer claim to provide stability. Russia's currency is down this year more than Ukraine's or Syria's.

Post: #110

It's tough to say where it will end. I was about to buy rubles last Friday for my move to Russia, but I held out in the hope it would go down further, and so it has. In fairness the ruble was always overvalued, prices were almost as high as in most major cities and yet wages were still far lower, the only difference is that things have snowballed in the last few months rather than the Russian government being able to let it float freely and gradually by the end of 2014 on their own terms.

We'll see if it drops any further, but I don't think the country is going to face the kind of economic collapse it did in 1998, it's a very different scenario. And it certainly won't change the political course of Russia. They knew this was coming and will have steeled themselves for the worst.

Post: #111

nothing to do with obama and merkel

and everything to do with Saudi Arabia's desire to take down Russia and her Syrian and Iranian proxies.

America is just the collateral beneficiary. Actually, part of Saudi's motivation is to also damage the US tracking industry

This is the analysis from one of my top sources, a man so powerful and connected that he talks to Merkel, Putin and Clinton nearly as often than Giovanny bangs college girls.

Post: #112

merkel and obama are crowd pleasing wafflers, putin was running rings around them.

to deal with a steely eyed mofo like putin, you needed someone more mental and extreme than him

enter the Saudis

Bet Putin wishes he made a different decision when the head of Saudi intelligence offered him a oil price deal in exchange for dropping Assad.

http://www.telegraph.co.uk/finance/newsb...Syria.html

Post: #113

The central bank of Russia took a page straight out of Paul Volker's playbook.

Edit: They should have gone straight with 20%, like Volker did.

Post: #114

I wonder what the guys who criticized the US/Fed for Volker's tactics saying the fall of the US was imminent will say about this now.

Is this the fall of Putin?

Post: #115

(12-15-2014 07:09 PM)Cattle Rustler Wrote:  I wonder what the guys who criticized the US/Fed for Volker's tactics saying the fall of the US was imminent will say about this now.

Is this the fall of Putin?

who would criticize volcker? dude pulled that trick 30 years ago and is now regarded as a genius

Post: #116

(12-15-2014 07:11 PM)Swordfish Wrote:  

(12-15-2014 07:09 PM)Cattle Rustler Wrote:  I wonder what the guys who criticized the US/Fed for Volker's tactics saying the fall of the US was imminent will say about this now.

Is this the fall of Putin?

who would criticize volcker? dude pulled that trick 30 years ago and is now regarded as a genius

That's the thing, one can't make everyone happy.

Post: #117

Yes, the huge hike is Volckeresque, however a move of this type might save the currency, but it will almost certainly cause a huge and deep recession. It will put the brakes on the already lagging economy in a huge way.

Either way, moves of this type never seem to work for smaller economies of this type, just look how many times the Swiss Central Bank has tried to intervene to move their currency and then the market moves against them. Hedge Funds will be circling like vultures on this, blood is officially in the water. There is usually a quick bump on the news and then it gets ugly again.

Since my Latvian wife speaks fluent Russian, and the cost of a Russian vacation is becoming more and more attractive, this summer might be a very good time to head to St. Petersburg or Moscow. USD/RUB 80 is no longer out of the question at this point.

The Russian Central bank essentially blew its wad today and if this doesn't work, no more bullets in the revolver at this point. Going to be very interesting.

Post: #118

any subsequent moves would be political rather than central bank led.

putin is probably more amenable to 'suggestions' from Merkel, Obama and especially the Saudis at this point.

if they don't rub it in his face and allow Putin a face-saving move or two, it might be conceivable we see important deals done on the two key irritants roiling global political economics today

(12-15-2014 07:28 PM)MichaelCorleone Wrote:  Yes, the huge hike is Volckeresque, however a move of this type might save the currency, but it will almost certainly cause a huge and deep recession. It will put the brakes on the already lagging economy in a huge way.

Either way, moves of this type never seem to work for smaller economies of this type, just look how many times the Swiss Central Bank has tried to intervene to move their currency and then the market moves against them. Hedge Funds will be circling like vultures on this, blood is officially in the water. There is usually a quick bump on the news and then it gets ugly again.

Since my Latvian wife speaks fluent Russian, and the cost of a Russian vacation is becoming more and more attractive, this summer might be a very good time to head to St. Petersburg or Moscow. USD/RUB 80 is no longer out of the question at this point.

The Russian Central bank essentially blew its wad today and if this doesn't work, no more bullets in the revolver at this point. Going to be very interesting.

Post: #119

(12-15-2014 07:28 PM)MichaelCorleone Wrote:  The Russian Central bank essentially blew its wad today and if this doesn't work, no more bullets in the revolver at this point. Going to be very interesting.

There is actually more the central bank could be doing (from JPM via Zerohedge):

Quote:The rate hike occurred after today's 10% depreciation of the RUB despite attempts by the CBR to intervene earlier in the day. The decision was aimed at "limiting substantially increased ruble depreciation risks and inflation risks" according to the CBR. This emergency move suggests to us that household deposit dollarisation had increased significantly (official October data had already suggested dollarisation re-accelerated again). Tonight's large rate hike should in the short term help to slow retail dollarisation demand. However rate hikes do little to help the underlying demand for USD from corporates and banks who continue to front load their demand in order to apy their FX debt payments further down the line. With limited access to USD funding markets and oil having yet to find its bottom, the perceptions of local banks and corps on RUB continues to be negative, fuelling this hoarding behavior. In this context, there is a real possibility that even such a significant rate hike may not be enough in the medium run to stem RUB depreciation. The central bank in our view needs to announce a package of measures alongside rate hikes which also aim to lam local fears of USD scarcity. This will most likely involve making available a sizeable amount of FX reserves (we have suggested around USD100bn in our piece) through a combination of deposits in state banks and the CBR's existing repo facility. The CBR however continue to be unwilling to commit their FX reserves, with their focus still primarily concentrated on defending the sovereign balance sheet. As part of a package of measures, the CBE may also look to cap local bank open FX position limit down from the current 20% of capital as well as raise FX RRRs to help stem deposit dollarisation. Further pressure can also be put on corporates to convert their FX proceeds faster.

As a last resort, Russia could stop the free-float of the ruble and implement capital controls to help stem the ruble depreciation.

Also, if oil prices keep falling, then the ruble has to fall. Period. End of story. No amount of intervention can stop the ruble from falling when oil prices fall.

What Russia mainly needs to worry about is stopping huge overshoots, like the one that happened today, from continuing to occur by doing targeted interventions.

Post: #120

Micex down 7% today #russiabull

Post: #121

Russia should go to the heart of the matter and keep oil off the market. Don't cut production, which is hard and costly to do in Siberia, just flow it into strategic reserves and keep it off the market.

Even though most of the rubles fall is due to manipulation and speculation, the basis for that is low oil prices. No clue if Saudi Arabia was being legit last month when they said they'd cut oil if Russia and others did too, but at this point Russia needs to cut even if Saudi Arabia doesn't (and even if those assholes raise production in response).

It sounds like the manipulators are going to push oil down into the $40's. With that floor in mind and with all the oil Russia produces, if you work the numbers, testing various supply cuts over 2 months wouldn't cost Russia much IF they have no effect on price. But, the cuts most likely would have a big effect on stabilizing and raising prices. Just need to commit to testing, adjusting, and challenging the manipulators. Russia needs to balance this with the fact that, yeah, maybe it's a good idea to have oil a little lower, at say $70 a barrel compared to what it typically was over recent years, in order to knock out and cause instability.

Right now the instability is with Russian currency. Use oil to stabilize the currency and the standard of living of all Russians, without doing self-destructive things like interest rate hikes.

There's an oversupply of 1-2 million barrels of oil a day right now. Russia can test a 500,000 barrel a day cut and see what happens to prices and how Saudi Arabia reacts. No way prices go lower even if Saudi Arabia raises output so at worst they stay the same and Russia would lose 500,000 barrels x $45 (using the price oil would be if Russia doesn't act, not the current price) = $22.5 million a day lost, worse case scenario. (That is NOTHING compared to the costs right now due to the ruble manipulation, foreign reserves wasted, and cost of a lower standard of living due to all the manipulations and interest rate hikes.) If that cut proves to not be enough to help oil back to the $70 Brent range, cut again to say 750,000-1,000,000).

Russia produces 10.5 million barrels a day. Work the numbers. Cut 1.5 million barrels a day.
Sell 10.5 million barrels a day at $45 or 9 million at $70? Which makes Russia more money and provides stability? Obviously that's hypothetical.

So what if Russia cuts say 1 million and Saudi Arabia adds 1 million? OK. Well, the bottom line is Saudi Arabia will always win this game due to high production, low population, and low costs, but this shouldn't be looked at as a Saudi Arabia wins, Russia loses. It should be looked at as this... does Russia risk losing more by doing nothing or by making an aggressive move/cut? What and how high are the upsides if Russia does nothing or if Russia does cut?

Bottom line... making the oil cut is less risky/costly and it's also the only move that has an upside. Russia could easily weather cuts and balance oil prices around $70 a barrel for Brent in order to damage shale. If Saudi Arabia wants to add production and show it's cards that it's an American puppet, Russia should fight it out with them and be prepared to organize cuts with others to match any Saudi increases (and then some). Selling oil for $45 a barrel is absolutely nuts and makes no sense for Russia. If necessary, go crazy Ivan on the world. Russia exports around 8 million barrels of oil a day. The west talks oil down, so Russia should talk it up. "Until further notice, Russia is cutting oil exports by 1 million barrels a day and is prepared to cut oil exports by up to 3 million barrels a day." Then watch how the market reacts. If positively, say nothing. If it's not good enough make an unexpected announcement saying Russia will cut oil exports by 2 million barrels a day until further notice."

Russia can't go toe-toe with the west with currency and financial manipulations so it has to use oil (and natural gas). It's obvious the west is waging an economic war so Russia is forced into doing some drastic things. Russia simply can't accept oil at $45, a ruble at 65-80 to the dollar, and interest rates as big and punishing as my dick. Oil cuts are the least painful option and it's one that Russia controls and can dictate.

Also, Iran could help out by instigating some shia unrest in Saudi Arabia's oil producing areas.

Post: #122

I think it's not even the oil prices plunge that is causing the ruble to fall now. There is a massive speculation against the ruble underway, probably lots of hedge funds are shorting the ruble heavily.

The exchange rate is now approaching 90 against the euro, and it's over 70 against the dollar.

Post: #123

spot USDRUB 73.80-74.20

Post: #124

Lol, it's 92,10...it went down 4% in a matter of minutes
+12.50%

Post: #125

I feel for the middle classes in Russia, they are going to get crushed by this geo-political chess b/ween US/Russia/EU

Safe to say Russia has a full blown ccy crisis on its hands here. Danger of contagion spreading to other EM ccy's