Just days after the western media was crowing over a Soviet-like collapse of Russia. Even Bloomberg has to 'fess up.
Beijing
says Russia is able to overcome economic crisis itself, China ready
to help
“We
believe that Russia has opportunities and knowledge to overcome the
current problems in the economy," Chinese Foreign Minister Wang
Yi said
25
December, 2014
Russia
is capable of coping with the current economic hardships itself, but
China is ready to offer a helping hand to Moscow, the Chinese Foreign
Ministry’s spokesman said on Thursday.
“Russia
has enough possibilities to overcome the economic crisis, but if
necessary, China can provide support,” Hua Chunying said. “China
and Russia have ties of an all-encompassing partnership,” the
diplomat stressed.
Chinese
Foreign Minister Wang Yi also said in an interview with Hong Kong’s
Fenghuang TV channel on Sunday that Beijing is ready to offer
whatever assistance if needed.
“We
believe that Russia has opportunities and knowledge to overcome the
current problems in the economy. The Chinese-Russian relations of
strategic partnership are at a high level, we are always supporting
and helping our friend. If the Russian side needs it, we shall offer
all possible support we may have,” the foreign minister said.
Speaking
on the current situation with Russia’s ruble, China’s Minister of
Commerce Gao Hucheng said fluctuations in the currency market may be
of certain interest for some capital investors.
The
minister also expressed confidence that the current financial and
economic situation in Russia would not affect implementation of the
major Russian-Chinese projects in the energy, industries and other
spheres.
Ruble
Rallies 34% After Biggest Russian Intervention In 5 Years
25
December, 2014
Since
the Russian Ruble troughed at almost 80 RUB/USD, it has rallied
an impressive 34% erasing most of the dramatic devaluation of
December.
However, as The CBR just announced, this 'strength' came at a price.
Russia burned
through $15.7 billion of reserves in the week ending Dec 19th -
the biggest percentage weekly drop in reserves since Jan 2009,
leaving reserves below $400 billion (still a significant amount) for
the first time since Aug 2009. While CBR explained much of this will
come back as repo trades mature, Vladimir
Putin turned inward, blaming the government for "defects"
in restructuring the economy.
The
Ruble has soared in the last 2 weeks...
On
the heels of the biggest intervention in almost 5 years...
- *RUSSIAN INTERNATIONAL RESERVES FALL $15.7B IN WEEK TO DEC. 19
- *RUSSIAN INTERNATIONAL RESERVES AT $398.9B
- *BANK OF RUSSIA SAYS DROP IN RESERVES MOSTLY DUE TO FX REPO
- *BANK OF RUSSIA: FUNDS USED IN FX REPO WILL RETURN TO RESERVES
- *RUSSIA RESERVES ALSO FELL ON REVALUATION AS USD GAINED VS EURO
But,
as Sputnik news reports, it's
not just external factors, Putin points his finger internally...
The difficulties in Russia’s economy are not only because of outside factors, including sanctions, but also because the government has not worked out some defects, Russian President Vladimir Putin said Thursday.
“The difficulties that we have run into carry not only an outside factor. They are not solely tied to some sorts of limitations of sanctions or limitations tied with the objective international environment, they are tied to our not working out defects that have accumulated over the years,” Putin said during a government meeting in Moscow.
Putin said the government has taken efforts in order to change the structure of the economy in order to give it a more innovative nature, but said the efforts were below the needed measures.
“Much has been done in this but the latest events have shown that this is insufficient,”Putin added.
Russia is currently facing an economic slowdown, with dramatic fluctuations seen recently in the value of the Russian ruble against the US dollar and the euro.
The weakening of the Russian national currency is attributed to low oil prices. The sale of oil accounts for a significant part of Russian budget revenues. Economic sanctions imposed on Moscow by the West in the wake of the Ukrainian crisis are also cited among the reasons for the economic slump.
During a December 18 televised press conference, the Russian president said that the country's economic situation could begin to improve in the first quarter of 2015, with Russia's economy recovering completely over the next few years.
*
* *
Still
it's not like $400 billion is going to disappear tomorrow - for those
proclaiming Russia's imminent default. (CDS
imply a mere 5% probability of default over the next year based on
25% recovery assumptions)
How
Putin Stopped the Ruble's Collapse
By Leonid
Bershidsky
23
December, 2014
The
Russian ruble, which last week briefly became the world's
worst-performing currency, is rebounding, as is the battered Russian
stock market. That doesn't mean President Vladimir Putin's economic
team has managed to fully stabilize the currency or resolve any of
the underlying problems that led to its recent plunge.
The current rate of less than 55 per U.S. dollar seems miraculous after last week's "Black Tuesday," which saw the ruble almost reach 80 per U.S. dollar. That decline followed a surprise decision by the Russian Central Bank to increase its key lending rate 6.5 percentage points to 17 percent, and it appeared the monetary authorities could do nothing short of introducing currency controls to halt the out.
Nigeria's oil currency, the naira, is only down 4 percent against the dollar in the last 30 days, unlike the ruble, which lost almost 37 percent at its lowest point. Yet the African country's central bank has not been shy to impose a mild version of currency controls. It has banned local lenders from holding open forex positions overnight and required them to use purchased foreign currency within 48 hours, or sell it to regulator.
Russia has so far avoided introducing the kinds of measures, such as a moratorium on foreign debt repayment and an order to trade in 100 percent of foreign revenues for rubles, that were applied after its domestic debt default in 1998. Instead, the government is demonstrating the broad formal and informal control over the Russian economy it has acquired during Putin's rule.
The government is working through the boards of directors of state-controlled companies to give them until March 2015 to reduce the balances in their hard currency accounts to the level of October 1, 2014. Private companies are being told to do the same or face the Kremlin's ire -- a suggestion that can be as effective as a direct order in a country that has no real private property guarantees. Swissquote, an online bank, estimates that the requirement means a gradual sell-off of $50 billion, sparing the central bank the need to deplete its international reserves to hold up the ruble. Besides, one more company selling hard currency is one less player betting on the ruble's further decline.
So far, the tactic is working, even though there's been no sudden change in dollar and euro trading volumes on the Moscow Exchange. Short-sellers have become hesitant to bet against the ruble, knowing that some big foreign currency sales are coming. Here's how the number of short ruble contracts on CME, the world's biggest derivatives marketplace, has dropped lately:
That gives the Russian monetary authorities some breathing space, but that's all. The Central Bank already has to deal with the consequences of the ineffective rate hike. The interbank market has seized up, with banks unwilling to lend to each other. The overnight MosPrime rate, at which top banks fund each other, stands at 23.5 percent. With liquidity this tight, it's only a matter of time before banks start failing.
The country's 28th biggest bank by assets, Trust, yesterday received a 30 billion ruble ($546 million) bailout from the central bank. It is unlikely to be the last to crumble, given that Russian financial institutions are cut off from Western credit markets by the fallout from the U.S. and European sanctions, and there’s no viable domestic alternative.
The Central Bank cannot, however, lower its key interest rate now because that would send the wrong signal to the market. It would force big companies to give up their dollar cash for nothing.
So, what if the oil price keeps going down, if there's no sanction-ending deal in Ukraine, or other positive external event? Putin says the Russian economy will reformat itself to push out imports and increase domestic production, but the ruble can be slaughtered again faster than this will happen.
It's clear now that the Russian monetary authorities need to keep the ruble at the current level to minimize the risk of mass protest. "Black Tuesday" took Russian dangerously close to the brink: People rushed to the stores to buy up electronics and anything that was still selling at "old" prices, they cleaned the supplies of dollars and euros at currency exchanges, and poured out so much anger at the government on social networks that another ruble plunge could create too much political tension. As it is, Russians are going to be hit with double-digit inflation early next year as importers rewrite price tags and local producers adjust to the rising prices of foreign ingredients and Бequipment.
It doesn't take long to list all the resources still available to the government and the Central Bank if -- or, rather, when -- they need to fight off another attack on the ruble. There's the $24 billion currency swap China has offered to help prop up the ruble; international reserves, which won't last long against a sustained attack; and currency controls. Moody's, the ratings agency, sees the risk of their introduction as quite high. Last night, it lowered the rating ceiling on Russian issuers' foreign-denominated bonds, saying:
The decision to place the foreign currency bond ceiling at the same level as the government bond rating reflects Moody's assessment of the very high likelihood that foreign exchange controls preventing non-sovereign issuers from servicing their foreign currency debt obligations would be imposed by the government in the event that it defaulted on its own debt. Moody's also notes that the risk of the government imposing moratorium restrictions even in the absence of its own default has risen, in the context of the significant currency depreciation and given its ability to control access to foreign exchange reserves.Given that this last resort is still available, it's unlikely Russia will cry uncle on Ukraine anytime soon. Even if talks in Minsk over the Christmas break prolong the current ceasefire and yield a deal on control of the Russian-Ukrainian border, that won't mean Putin is about to surrender. The improved performance of the ruble and Russian stocks in the last few days is going to give him fresh confidence in his country's resilience.
More
accurately rendered as “we don’t give a fuck about the crisis’
Russian
Supermarket Creates 'We Don't Give a Damn About the Crisis' Sala
19
December, 2014
For wealthy
Russians who want to flout their indifference to the tough
economic times ahead, an upscale grocery store in Yekaterinburg
is offering a way to show off — a caviar
"salad" decorated with a defiant slogan.
On sale
at the city's Yeliseyevsky supermarket, the dish consists
of a layer of salmon row topped with an arrangement
of sturgeon caviar that spells out the words: "We
don't give a damn about the crisis," according
to accounts and photos posted online.
The salad
sells for 96 rubles ($1.80) per 100 grams, an employee
of the city administration's press service, Viktoria Mkrtchyan,
said on her Facebook page Wednesday. It was not immediately
clear if customers could buy a single 100-gram portion of the
salad, which would carry only part of the slogan.
Alexander
Ogloblin, owner of the supermarket chain that includes
the Yeliseyevsky store, told local news portal 66.ru that he was
behind the idea.
"During
the last crisis I gave my friend a cake with the same
writing," Ogloblin was quoted as saying. "And now, when
everybody is talking about nothing but the crisis, we decided
to make this joke in the time of cholera."
Despite
its high price tag, the salad is popular among customers, he
said. The Yeliseyevsky supermarket promotes itself as a grocery
store for Yekaterinburg's wealthy elite, local Znak.com news
portal reported.
The official
name of the dish is the "Demyan Bedny salad,"
Mkrtchyan wrote — a name honoring a Bolshevik poet
and satirist whose Russian pen name translates as "Demyan
the Poor."
ПрофильShort update about the Ruble and a great interview of Michael Hudson
The
Ruble is slowly climbing back up and is already treading at a much
more reasonable rate (with probably more readjustment ahead).
See for yourself:
But his happened at a great cost. See ZeroHedge about this:
http://www.zerohedge.com/news/2014-12-25/ruble-rallies-34-after-biggest-russian-intervention-5-years
Also, I would like to highly recommend the analysis of my favorite American economist, Michael Hudson who does a superb job explaining the Russian strategy for the Real News Network
Also, I would like to highly recommend the analysis of my favorite American economist, Michael Hudson who does a superb job explaining the Russian strategy for the Real News Network
Cheers,
The Saker
The Saker
http://vineyardsaker.blogspot.co.nz/2014/12/short-update-about-ruble-and-great.html
China and Russia know that they stand or fall together and they will support each other as if their survival depends on it as it does.
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