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Russia Central Bank Responds To Domestic Dollar Shortage, Starts Currency Swaps
With the Ruble hitting record lows once again today against the USDollar, it appears concerns over USD liquidity are growing in Russia. The Russian central bank has unveiled an FX swap operation, allowing firms to borrow dollars in exchange for Rubles for a duration of 1 day (at a cost of 7%p.a.). Of course, this squeeze on USD funding - driven by Western sanctions - will, instead of isolating Russia, force Russian companies (finding USD transactions prohibitively expensive) into the CNY-axis, thus further strengthening the Yuanification of world trade and the ultimate demise of the USD as reserve currency.
USDRUB at record lows...
And funding sanctions appear to have driven the Central Bank to supply USDollar liquidity into an apparently squeezed market...
As Bloomberg reports,
"Sanctions and closed access to foreign-exchange liquidity from the West” is feeding demand for dollars, Dmitry Polevoy, chief economist ING.
Foreign-exchange liquidity has “virtually dried out,” with volumes sinking to about $100 million per day, compared with $1 billion to $2 billion previously, according to Natalia Orlova, the chief economist for OAO Alfa Bank in Moscow.
...
Companies have $22 billion in dollar-denominated payments to make in September and local banks are “anticipating demand for hard currency from retailers and accumulating additional dollar liquidity,” Abdullaev said.
And as WSJ reports, the central bank has responded...
The Bank of Russia said Tuesday it introduced one-day currency swaps to aid banks "better management of the their short-term liquidity".
Russian banks, unable to borrow abroad, are experiencing a shortage of currency liquidity.
"We see, naturally, some distortion on the (currency) swap market, which shows a structural deficit of dollars," Russia's Deputy Finance Minister Alexei Moiseev said Tuesday.
In addition, Russia is creating an emergency fund to deal with Western sanctions...
Russia will create a multi-billion dollar anti-crisis fund in 2015 of money destined for the Pension Fund and some left over in this year's budget to help companies hit by sanctions, Finance Minister Anton Siluanov was quoted as saying on Monday.
...
Siluanov was quoted as saying by Russian news agencies that the decision to stop transferring money to the Pension Fund would hand the budget an extra 309 billion roubles ($8.18 billion US).
He said not all of that sum would go into the anti-crisis fund, but that it would also receive at least 100 billion roubles of money left over in this year's budget.
"This 100 billion roubles will be added to the [anti-crisis] reserve next year, which will allow us to help our companies," RIA news agency citied Siluanov as saying.
"We are planning to create a reserve of a significant size."
It was not clear how big the fund would be.
...
"When a series of our partners, if they can be called that, test Russia's strength through sanctions and all kinds of threats, it is important not to succumb to the temptation of so-called easy solutions and to preserve and continue the development of democratic processes in our society, our state," Medvedev said in a televised speech.
* * *
Increasingly making it prohibitively expensive for Russian firms to transact in USDollars...
Which will merely serves to drive those firms to look for Chinese counterparts and further into the CNY-axis of de-dollarization (as UK Chancellor Osborne recently confirmed).
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Damn right, we're showing those Godless Commies!
They don't back down, we'll tell 'em that our bonds they own aren't money good, anymore.
Why did the Russians bomb Pearl Harbor?
Fork, meet Dollar..
Russia will suffer in the short term, but ridding itself of the Fed Reserve Note parasite will make her healthier in the longer run.
Short term pain=long term gain.
I wish we still had that option.All we have looking forward is long and short term pain.
See below and "war without weapons."
This is an awesome amount of power being flexed here. Might jut be the happenstance of a raging bull market...but the only country not actively debasing right now is the USA. Obviously Russia is not actively debasing...but the history here is a bad one.
And they are paying a substantial rate of interest to not only dollar denominated but euro denominated creditors. I'm not a currency trader but either that euro is WAY over-valued or the Bucky is WAY undervalued.
And of course Russia could default.
Again.
We'll see if Scotland "goes for it" as well. That's another 100 billion Wall Street will want to finance. "In the name of the Queen" of course...
Default on what??
Private sector may have bankruptcies in businesses that need dollars, sure, but I don't exactly know why the government is in any shape near default right now.
They might be paying a substantial amount of interest, but the principal is tiny.
When the price of oil really starts crashing, and staying low for 5+ years, then you can start talking about default.
http://www.nationaldebtclocks.org/debtclock/russia
Economist Global Debt Comparison by country World Debt Clock Public Debt per person
Look that compare US, west Russia especially much maligned Belarus debt levels
Please define "not actively debasing".
The Fed balance sheet going from 900 billion to over 4 trillion has me thinking debasement but I am not a Harvard economist.
Harvard ECON 101
I'm not an economist but if the central bank prints currency to buy bawnds (debt), where does the currency go? Does the government put it under the mattress and not spend it? Don't you think the newly printed currency is added to the central bank (federal reserve) balance book or into the money supply (M1 or M2)? Heck if what you said it correct; then, the govenment has unlimited money supply and not worry about defaulting. I guess this is what is good about being the defacto global reserve...unlike Argentina or Russia where their currency becomes worthless when their respective central banks prints currency.
Are we so used to the new normal that we can't even recognize sarc now...
central banks buying stawks is not manipulating the market.
The three points I listed were complete satire.
".but the only country not actively debasing right now is the USA"
Umm are you completely retarded? We debase more than any other country in the entire world? Does the 580ish BILLION dollar deficit for 2014 ring a bell?
It is maddness that the rubel is at an all time low against the USD when we are biggest debtor nation in the world and Russia has a budget surplus. They just need to double the price of Natgas to Europe to get some extra cash flow going. What is Europe going to do not heat their homes or run their factories?
The Russians would probably prefer not to entirely sour the trading relationship if they can avoid it. There will, hopefully, be an afterwards.
Thank you Rooster. I was going to set the moron straight, but you beat me to it by a couple of hours. The sad part is that there are probably millions like him who believe that The US$ strength is because of sound fiscal policy, rather than the result of petrodollar system and a the least bad option in a race to the bottom of fiat currency hell.
Agreed. And as much as I still love this country, we have long gone past the point of short term pain, for long term gain. I think we lost that a couple of generations ago. The Russians understand what's at stake and are willing to pay now, collect later. We on the other hand, collect now and don't give a fuck who's going to pay for it later. Children and grandchildren be damned.
Direct orders from the Rothschilds
There is definitely an element of Asiatic 'tribes' vs. another tribe (that resides in the Mediterranean, but has far reaching influence in DC and the banking world) in play here. Nothing 'anti-semitic' about it either - it simply is what it is.
"far reaching influence in DC and the banking world"
Masterly understatement if I ever saw it!
15 years ago, Russia was on her knees and the AngloAmericans were invincible. How times have changed.
I thought it was the Germans....
Nope, it was the Jews.
Nope, wrong again troll. It was the Globalist ZIONISTS.
Not all Jews are Zionists and not all Zionists are Jews. But all Globalist Zionists are fervent adherents and practitioners of Manifest Destiny 2.0, aka "NWO".
Q: is NWO New-World Order, or New World-Order? Big difference, and a Q that no one besides Yours Truly is asking.
Correct. Mistake to tar all Jews with the same brush.
Every word out of the mouth of a Zionist is a lie...
What the Zionist wants, the Zionist takes.
http://www.balfourproject.org/balfour-and-palestine/
As I mentioned several times and earlier today (5223013)...
At this point, I'd drop the 1st shoe: All energy sales to Ukraine, or bills paid on behalf of Ukraine, will be calculated* in Gold but paid in a Combination of Rubles + Yuan + Gold. This is key, to prevent TPTB from playing FX Currency Games/Wars against the Ruble or CNY. the Ziocons will have a Stroke. So will Pres. Obola.
The 2nd shoe drops in Nov., when the EU also is billed the same way. The Ziocons will have a Coronary. Obola's head will explode.
Create EPEC (Energy Producing and Exporting Countries) to parallel OPEC. EPEC prices Energy (Gas, Oil, Electricity) in Gold, but settles in Rubles, Yuan or Gold.
* Indexing/Correlating Energy to Gold is 100% rational, objective, impossible to conjure out of thin air, and almost impossible to manipulate. It is the Ultimate ABSOLUTE CURRENCY: PRECIOUS ENERGY indexed to PRECIOUS MATERIALS/METALS. And all paper/fiat/elastic currencies are then indexed to these absolutes.
The Earth (Dollar) is no longer the Center of Things, the Sun (PM and Energy) is.
If you dethrone or cripple the Petro-Dollar, you cripple NATO/ZATO. QED.
Screw you Fed, ECB, WB and BIS, and screw you Zio-Ploticians!
I can't understand why Russia does NOT do that. There must be a reason I guess. Maybe those dollar denominated loans?
Cos they're pretty sure that much of the European nations's gold reserves are (supposed to be) in the Fed, perhaps?
Fuck the EU...let them go bang on the US door demanding their gold back. Not the problem of Russia...it'd be prudent to make them pay in advance, however. No gold...no BTUs.
China hasnt finished the looting of gold from the western banks yet thats why. The end game is nigh, its just a matter of time before this happens.
To paraphrase super Mario:
Well you really are asking questions that are so hypothetical that I don't have an answer to them. Well, I may have a partial answer. These questions are formulated by people who vastly underestimate what the higher order combined interest rate spread function means for TPTB. They vastly underestimate the amount of political, financial and military capital that has been invested in the current paradigm. And so they keep on asking questions like: "If the dollar breaks down, and if a country leaves the BIS/G10 plantation, it's not like a sliding door. It's a very important thing. It's a project of the Old World Order. That's why you have a very hard time asking people like me "what would happened if." There is no Plan B. The current paradigm of skim, tribute, plunder or whatever you tinfoil hatters want to call it will be maintained for the benefit of TPTB.
Rewriting all those algos would be damn nightmare anyway...
Understood. But you get precious little demand for algos, when you take away the higher-order effect after the Reset, i.e. get rid of Usury.
Even Einstein noted, when asked what the greatest invention was of the 20th century, he replied: "Compound Interest". Yeah, kinda hard to reconcile with E=mc2 or Moses's anti-Usury Laws.
check.....janet?
Demand for USD == Demand for 'Hard Currency'. LOL.
compared next to the ruble many currencies are "hard"
LOL
: 'I need something hard to hit this nail with'
:'Here, try this cotton candy'.
:'No, something HARD'.
:'OK,sorry - how about this donut then, it's a lot harder than the cotton candy'.
Old habits die hard. But even I learned to kick a few of my worst, somehow, over the years.
They're going to be forced to change theirs because Putin is NOT backing off this Ukraine thing. If Russia was mucking around in Canadian politics would our response to that be any different?
Weird shit he?
And what about the fact if this would blow over?
Do you think Russia will just forget this?
Won't China realize that America will one day do this to them to?
The dollar is a gruel currency which countries now need to take as a mandatory poison but people will look for cures.
The dollar is a dictator that just needs to go. Fast!
I know half of the community here believe that the collusion is global and its not a west / east paradigm. Maybe i have been clunkered already by this scam if thats the case.
I do beleive this is a stand off between Russia / China and Iran vs the West and its allies.
Your damn right, if Russia back down and are crushed by the West, China has absolutely no chance. But with Russia they stand a chance against global hedgemony.
Reserve currency provides convenience of settlement, however fuckers who control its issuance abuse the status that it does sooner or later become a liability. Clearly, for Russia the moment of USD becoming an obstacle rather than a facilitator of trade has come. Ruble won't become a new reserve currency, but certainly can serve as a strong regional one. Worse, I think sanctions against Russia turned a much more important page. For those unalligned, neutral who seek secure transfers USD is no longer an option either. Looking at how financial system mechanisms can be turned around to meet political ends just utterly destroys any faith in currency. Look for smaller countries jumping the ship quietly while huge ones are wrestling.
wasn't aware that china had de-dollared. oh well, the russians will enjoy their new bestest buddies the hard money lenders in china much moar methinks.
out of the frying pan, into the fire
Yuanification
Juanification
New Homophones!
What rhymes with "renminbi"?
Orange.
Great idea. Confiscate pension funds and use them to defend the sinking rouble. But only in (wink-wink) 2015- although the confiscation undoubtedly happened ahora.
Also note that Russian firms need 22B a month to make dollar-denominated debt payments. 8B in annual pension money is not going to make much of a dent in that problem.
Nor is selling stuff for yuan going to do it, since they will then need to swap yuan for dollars to make their payments.
Falklandization here we come, and the rasputitsa is fast approaching.
Isn´t west sancitons a typ of Force Majeure....???
No, you're thinking of the sandwich at Ruby Tuesdays, the 'Force Majeure'.
A spicy chicken breast on rye, a little mayo, avec frommage. It'll make you leave your wife.
Yes. Khamenei did the same thing. No problem.
Khamenei and Putin are allies and I'm sure Khamenei is advising Putin what to do
Leo Wanta bitchez!
Great. Switching to currency being printed faster than USD and JPY combined. Surely will end well...
Again "I think this was a gambit" (hat the State Department played on Putin.)
This is a war that appears to be being fought via economics. Competitive devaluations was THE hallmark of the Great Depression. The USA however has an open market and crystal clear pricing. I would not be at all surprised to see a huge move higher in trading volumes...maybe M2 will finally get off the door mat where it's been sitting for six years.
I'm still not buying the recovery thesis...not the least reason being "I don't personally feel recovered here." In fact I feel the exact opposite.
Therapy only makes it worse...
My Boomerang Won't Come Back - Charlie Drakehttp://www.youtube.com/watch?v=_prtbj4MtDU
Expect Russia to sell more US T-bonds ... if they have any left at this point.
Or just use the war as an excuse to default on debt owed US and EU banks.
Or both. here ya go: have this t-bond, banker. Go talk to the fed for payment.
What about a one troy oz silver coin stamped, "1 Trillion Rubles"
the west would LOVE to see Russia default. So many reasons I cant begin to explain. Least of all is cover for Western failures.
This is an attack by the tribal oligarchy in Russia to try and force Putin's hand. Same tribal oligarchy that runs Ukraine and wants the war with Russia.
What is Russia importing that they need to pay in Dollars? Nada, njet.
The tribesmen are clearing their Russian bank accounts and they want to convert into USD. Tell them to go fuck themselves 7 ways to Sunday and twice on the Sabath.
Don't underestimate the tribesmen. If they come gunning for an economy some serious shit will go down one way or the other.
"...money [] left over in this year's budget..."?!?!
That's no way to run a government. Appalling.
Money left over.... After not meeting commitments... Jeez, governments are stupid.
Russia could create a new Crypto Currency.
I travel to St. Petersburg twice a year. They want Rubles, not dollars, at least most the people I deal with.
We dont need your stinking dollars..... opps
"Putin's holding all the cards" = lol
So let me get this straight.. China is devaluing because their economy is slowing.. and Russians will be buying a currency that is devaluing to protect their currency assets .. good one..
That's why the Dollar is climbing ..because no one wants it...
Doesn't make sense to me
The Dollar is going to FLY for the short to intermediate term, becuae its the only market big enough to handle these situations..
Then Interest rates will rise for competition for the Dollar.. Wchich will kill all Debtors Public and Private
Makes more sense to me
So let me get this straight.. China is devaluing because their economy is slowing.. and Russians will be buying a currency that is devaluing to protect their currency assets .. good one..
That's why the Dollar is climbing ..because no one wants it...
Doesn't make sense to me
The Dollar is going to FLY for the short to intermediate term, becuae its the only market big enough to handle these situations..
Then Interest rates will rise for competition for the Dollar.. Wchich will kill all Debtors Public and Private
Makes more sense to me
... Tyler, you are trying too hard...
you mean
Dan Ivandjiiski
Putin and the Russian people have no need of the USD. These problems are the result of checker playing Obama and the chess master has no need for dollars while he controls the board.
Putin can not be hurt. Putin is god like. Putin has all of his hydrocarbon wealth in rubles so he cares not.
Putin has oil and can do anything he wants to anybody at anytime.
Just because some non connected business people need dollars to honor contracts, and remember Putin is all about following the law and honoring contracts, does not mean those dumbshit WH a holes are having any impact on the Russian economy.
Chess master of the universe wins again.
Putin, Putin, Putin is so smart.
Vlad is playing chess with the Rothchilds not Obadman.
Maybe the CNY stealth QE is to accommodate the swaps for yuan in the first place. Lets connect the dots.
I thought Russia had the 2nd largest reserve in US dollars in the world after China
Everyone was so concerned about a massive "dollar dump" in the market
I'm puzzled...