I have a few questions:<p>1. If I had shorted RUB on US intelligence reports leading up to the invasion, would I be able to collect, or would illiquidity stop me from being able to obtain RUB to cover my shorts?<p>2. What does this correspond to in terms of what will happen to their economy? Will everyone with savings be out half, while everything adjusts to the new prices and the fixed value of Russia's natural resources simply re-denominates into 2023 rubles? Too bad they halted stock trading, otherwise we'd know what the future expectations for profit are.<p>3. Does this indicate anything beyond A. a rush to move money out of the country and/or B. an expectation that their government will be printing a lot of money?
That's a 50% currency devaluation in a fortnight while the country's main export is still barely in the crosshairs. Russia might really be done.
As of yesterday, it was 1:112, already sharp decline in RUB value compared to pre-war/pre-sanction levels of ~1:80. Now it's 1:158.<p>What changed in the last 24 hours? I'm no expert, but apparently, this lines up with Moody's downgrading of Russia's credit rating to Ca:<p>> *Moody's said default risks had increased, and that foreign bondholders were likely to recoup only part of their investment.*<p>> <i>"The likely recovery for investors will be in line with the historical average, commensurate with a Ca rating," it said. "At the Ca rating level, the recovery expectations are at 35 to 65% (of face value)."</i><p><a href="https://www.reuters.com/business/finance/moodys-cuts-russia-rating-ca-rise-default-risk-2022-03-06/" rel="nofollow">https://www.reuters.com/business/finance/moodys-cuts-russia-...</a><p>This may also be related to American and European efforts to ban imports of Russian petroleum.
One more sign that this has been planned, and they were prepared against sanctions, is that Russia has been growing their gold and foreign currency reserve for a very long time.<p><a href="https://qz.com/52623/russias-government-has-become-the-worlds-largest-buyer-of-gold-driven-by-fears-of-currency-cataclysm/" rel="nofollow">https://qz.com/52623/russias-government-has-become-the-world...</a><p><a href="https://tradingeconomics.com/russia/gold-reserves" rel="nofollow">https://tradingeconomics.com/russia/gold-reserves</a><p><a href="https://data.worldbank.org/indicator/FI.RES.TOTL.CD?locations=RU" rel="nofollow">https://data.worldbank.org/indicator/FI.RES.TOTL.CD?location...</a>
If the Russian people can't convert their Rubles to USD/Euro or buy products outside their country, does it really matter? Like, sure if they bought something overseas it might cost twice as much as before, but that does not necessarily imply that you have to adjust prices for products inside of Russia, as everyone still functionally has the same amount of money.<p>Of course, this is without talking about all of the effects from being cut off from the global supply chain, which will certainly cause chaos on an economy. I guess what I am ultimately asking is, did the Ruble lose value, or did every other currency that isn't a Ruble gain value? Does the currency conversion rates actually represent purchasing power of currencies?
This probably means that the “black market” rate is even higher.<p>I wouldn’t be too surprised if the street rate for buying USD within Russia is 200 Rubles to the dollar.
I remember when I visited the USSR in 1990 (it was still the USSR at that point, barely), it was around 8 rubles to the dollar, and the buying power of those 8 rubles was very large indeed.<p>I think I took a total of $200 US on the trip, and I was not even able to spend it all, despite being in the USSR for a couple weeks. There simply was not enough to buy that anyone would want to buy, at least not things I could take back on the plane. I ended up getting 9 very nice fur hats, for that reason, to give out to family and friends. I still have mine! It's very warm and nice.
The spreads were very interesting during the weekend right after the invasion, while the markets were closed.<p>I remember checking Revolut and it offered to buy USD for ~75 RUB and sell USD for ~140 RUB (there are no fees).<p>Such uncertainty!
Some forex trading platforms let you get up to 400x leverage since currency is usually very stable. I'm sure it's restricted to certain currency pairs, but damn imagine getting caught on the wrong (or right!) side of that.
Hopefully I got something wrong but to me it looks like evil genius from hell:<p>The drop of the ruble made the war much cheaper for Russia.<p>1. They pay their soldiers in rub, machinery was already paid or is bought from domestic suppliers in RUB.<p>2. Russia earns eur or usd by selling oil and gas to the EU. They earn more rub because the rate decreased so much.<p>As a result: Russia silently decreased the payment of their soldiers by the exact amount that the ruble fell. A truely evil plan. Fighting your brother nation and not even paying for it. The more the rub falls, the cheaper the war gets for them.
<a href="https://www.bloomberg.com/quote/USDRUB:CUR" rel="nofollow">https://www.bloomberg.com/quote/USDRUB:CUR</a><p>And it spiked to 174 earlier today.
Can anyone explain the consequences of this coupled with the list of "unfriendly countries" that Russia just announced? [0]<p>> Russian citizens and companies, the state itself [..] that have foreign exchange obligations to foreign creditors from the list of unfriendly countries will be able to pay them in rubles<p>[0] <a href="https://tass.com/politics/1418197" rel="nofollow">https://tass.com/politics/1418197</a>
Of course Putin and cronies won't get affected and won't stop the war because they are old and have already lived a full life and they are still the richest Russians.<p>The entire episode of Putin has convinced me that as a human organizational structure - Leaders must have an expiration date and there has to be a system to preemptively eject politicians from power.<p>Of course, people in leadership positions will hate this.
USD-HUF (and EUR-HUF) is also bonkers<p><a href="https://www.xe.com/currencycharts/?from=USD&to=HUF" rel="nofollow">https://www.xe.com/currencycharts/?from=USD&to=HUF</a>
Let's see, a country punished for its aggression, leading to crazy hyperinflation, misery, rise of right-wing leadership...<p>What gets me is I still can't figure out what Putin's motivation is. Is this really better than having left things alone?
Despite the sanitized name, "economic sanctions" are violence and collective punishment. Average Russians will be (and already are) take the brunt of this as their savings are destroyed by inflation and/or seized (the Russian "parliament" passed a law requiring all foreign currency payments and bank accounts to have 80% converted to rubles).<p>Lack of food security and access to basic medicines will kill people here, just like it did in Iraq and is doing in Iran and Venezuela. Speaking of Venezuela, all of a sudden the US has warmed to the idea of easing or removing Venezuelan sactions [1] since its a large oil producer.<p>The point is that none of these sanctions are about principle. It's purely self-serving to US strategic interests and the protection of capital (much like Shell buying discounted Russian oil [2]).<p>[1]: <a href="https://www.reuters.com/world/americas/us-venezuela-discuss-easing-sanctions-make-little-progress-sources-2022-03-06/" rel="nofollow">https://www.reuters.com/world/americas/us-venezuela-discuss-...</a><p>[2]: <a href="https://www.cnbc.com/2022/03/06/shell-defends-decision-to-buy-discounted-oil-from-russia.html" rel="nofollow">https://www.cnbc.com/2022/03/06/shell-defends-decision-to-bu...</a>