Special Extra: The Ruble in Freefall

On Monday, the Russian ruble fell to all-time low against the European euro currency, losing close to 2.5% of its value.   It now takes nearly 42 Russian rubles to buy one euro, more than it has ever taken since the euro currency was invented.  Almost 30 rubles are now required to buy one U.S. dollar, a price Russia hasn’t seen in more than three years, up close to 30% since the August when one dollar could be purchased for just over 23 rubles. In a watershed event, the ruble was finally allowed to fall more than 1% against the euro-dollar blend in a single day, the first time that has happened in recent memory.

With every uptick in the price of foreign currency, the price of goods made by those countries rises in Russia.  In a normal economy, this would have the salutary effect of increasing demand for domestic products, but Russia as we all know isn’t normal.  It has never developed adequate substitutes for a whole range of foreign products, meaning that Russians either empty their pockets or do without.

In a truly bizarre remark, “Prime Minister” Vladimir Putin said that the Kremlin was allowing the ruble to fall “to let the citizens get their heads around the situation.”  Is he admitting that until now he has been hiding the reality of the economic crisis from the population?  Isn’t it possible that part of the reason it is happening is that Russia simply can’t afford to go on creating artificial value for the ruble by spending its finite cash reserves?

Russia’s Urals Blend crude oil is pennies away from crashing through the $30/barrel barrier.  The Kremlin is running out of cash and has no choice but to allow the ruble to fall.  Putin is fiddling while Russia burns.

3 responses to “Special Extra: The Ruble in Freefall

  1. Well, if it’s almost the New Year, it must be time for Gazprom to jerk Ukraine, and Europe, around.

    And, lo and behold, Gazprom has a web site about how bad Ukraine is.

    Notice that they skirt around the problem of RosUkrEnergo.

    To whom is the debt owed? Well, Ukraine hasn’t paid.

    What does RosUkrEnergo do?

    Well, we won’t get into that.

    Who comprises the mysterious entity called RosUkrEnergo? Well, 50% insiders of Gazprom, as a means of “taking care of their own,” meaning corrupt rooshan oligarchs, and 50% corrupt Ukrainian oligarchs, like Firtash.

    But let’s not get into that.

    Let’s just play the same old rooshan non-information game, and let’s roosha blame everything on everyone else, and portray itself as “poor, little defenseless, oily orthodox good guys.”


  2. Ruble falls, then Russian goods become cheaper. Their exports go up. That provides jobs for the citizens. Not all bad.

    Oh, I forgot. Putin did not diversify the economy. They have nothing but NR to export. Not finished goods or food stuffs. Russians will have to import all those items and it will be more expensive. This is why you don’t elect a FSB officer as president. The Russians have got it all as backwards. (The Obamaniacs are quickly following behind.)

  3. “to let the citizens get their heads around the situation.” ROFL!!!! If Putin hates America so much what the … is he using American corporate jargon for????? But to be honest, he should have said ‘to let the citizens get their heads screwed on straight’

    LR is right, if he is “allowing” a situation to occur so as to educate the populace, what white-washing game was he pulling before? Seems he’s allowing his country’s economy to disintegrate the same way a skier allows an avalanche to sweep him away!

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