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Despite Surprise Rate-Hike, Russian Ruble Crashes Most In 6 Years
Yesterday's record-breaking surge in the Ruble appears, as we warned, to have been front-running today's rate-hike announcement... and despite its surprise size, it is disappointing the market. The 5%-plus swing higher in the Ruble yesterday has been notably retraced as the Russian currency plunges (biggest drop in almost 6 years) after the central bank hiked rates 150bps (expectations were broadly of a 50bps hike) but it appears the 'whisper' number was a 200bps hike and a shift in FX policy to more active intervention. The inituial rip rally instantly faded and despite low liquidity due to Russian holidays, USDRUB is back over 43 - which would be a new record low close if it holds.
Russian Central Bank disappointed...
- *RUSSIAN CENTRAL BANK RAISES KEY RATE TO 9.50% (up from 8%)
- *BANK OF RUSSIA DOESN'T ANNOUNCE CHANGES TO FX POLICY
- *BANK OF RUSSIA SEES SIGNS FOR SLOWING INFLATION IN MID-TERM
- *BANK OF RUSSIA READY TO EASE IF EXTERNAL CONDITIONS IMPROVE
22 of 31 economists in Bloomberg survey forecast 50bps increase; 2 predicted move to 9%; increases of 25bps and 75bps forecast by 1 each; 5 economists projected no change
The reaction:
- *RUBLE EXTENDS DECLINES, WEAKENS 2.9% VS BASKET
Biggest plunge in almost 6 years
Analysts react:
- *RUSSIAN RATE RISE WON'T `SIGNIFICANTLY' SUPPORT RUBLE: NORDEA
- *RUBLE WEAKNESS IS `BEYOND SPHERE OF MONETARY POLICY': NORDEA
- *RBS: RATE RISE WON'T ELIMINATE FX SHORTAGE BEHIND RUBLE DROP
The weakness has prompted furtherremarks from the central bank:
- *BANK OF RUSSIA CONDUCTS INTERVENTIONS IN LINE WITH FX POLICY
- *BANK OF RUSSIA INTERVENES ONLY AT EDGE OF RUB FLOATING CORRIDOR
- *BANK OF RUSSIA: TIGHTENING HASN'T YET OFFSET IMPACT OF WEAK RUB
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Explostion at "Radio France" in Paris
Police have set up a security perimeter around the Radio France headquarters in Paris as authorities respond to fire - @radiofrance
Heavy smoke comes out of Radio France building in Paris as authorities respond to blaze -
Building burns
latest:
http://tersee.com/#!q=radio+france&t=text
Did a burning snow plow crash into it?
It's called warfare, bitchez
No explosion, just a fire.
it will continue to hurt russia to try to live in a fiat-based economy while trying to move over to one founded on sound money. they seem totally dependent on china for this move, and that brings up another question. just how close are russia and china and their economic plans? we all know about the BRICS, but we also know the centuries of hostilities between the two.
does china have a behind the scenes kill date they share with russia, or is is all a vague plan for someday in the future? from all appearances it would seem they are letting the current system follow its inevitable demise while they keep up a program of collecting, mining, building, drilling and buying. all their actions speak loudly for valuing real assets in anticipation of the worldwide paper blizzard that they know will bury the world.
The answer may be in Singapore. Minimal trade with the East (pecans walnuts) so I am no expert. South america is a mess, so the "B" in BRIICS is having it's own problems. That's all I can say.
Is anyone buying the Ruble?
Any players yet?
I would give that song a 85..good beat and easy to dance to..and here is 5 gallons of gas to get the party started...
The Tribe is trying everything to hurt the Bear
The US is manufactoring Deflation, sending it Overnight Express to Vladi.
Hahahaha.... its called putin up wid it.
Yes, from our perspective the ruble is "crashing". Now the question is, what currency do the majority of the people in the world use for everyday purchases? That's all that matters.
Currency wars are heating up. Keep fucking around boys and the nukes will fly.
It's got nothing to do with Russian rates. This is a full frontal faith attack for Anglo Saxon finance today. Kill commodities, surge ponzi equities and turn the screws on anyone not playing along.
Total war bitchez
all worlds finance rigged by banksters.
Yep. Central banks control currencies, period. It's what they do. Central banks in the west are pushing those currencies to their limits. Start paying attention people, timing is everything now. Eventually this sailboat is going to have to come about.
hold fast
and duck
How do you say "Wollt ihr den totalen Krieg?" in Hebrew or Kenyan?
Look at gold and silver crash with increased QE. Everything is manipulated. If the US can illegally collect over 100 billion pieces of intelligence a month, how difficult is to manipulate a few financial markets?
'We're an empire and when we act, we create our own reality' Karl Rove
This new reality does not have to be consistent with economic theory or common sense.
"This new reality does not have to be consistent with economic theory or common sense." --- Well, might makes right is certainly nothing new, neither are the eventual outcomes.
One eventual outcome is that Russia will HAVE to sell its hydrocarbons for Rubles or Gold.
This is piece meal WW3, boys.
Putin for all his machismo makes the critical mistake that there are other types of wars other than physical wars. Russia is a big military bear but a relative weakling in the financial arena.
He said 'F' you' to Europe and USA and they have responded; 'F' me?! - No - F' you!'
Perhaps, but they still control vast amounts of real resources. With 7+ billion people (and growing) all competing for the real resources (especially energy) required for a better standard of living things will get very interesting.
The problem for America is when you are on top (and I for one know the power of real american innovation, when capital is properly deployed), is that you are on everyone's hit list. Well that and massive fraud and and an average sheeple that is a complete fucking idiot (see detroit/fergurson).
A recent experience in the Land Down Under: iron ore dropping like a stone, yet AUD$ holding up (dropping, yes - but relatively slowly in comparison to iron ore drop). All the news was screaming that if the AUD$ could drop just a bit further, it would offset the iron ore price drop and all will be well.
We had a similar experience here in the USA: smacking the dollar like a bitch for years to improve the manufacturing/export base, cheapen exports to make them more competitive etc.
So, Russia is a significant net exporter and a major exporter of hydrocarbons. Hydrocarbon prices are dropping, the RUB is dropping just as fast.
Is it really that big a problem for Russia?
Yes - Mother Russia depends on high oil (like the Oil Cartels) for cash-flow. Weak Ruble good for manufacturing exports but bad for oil exports.
I get your point but the math doesn't support it, see:
Oil @ USD100 // USDRUB @ 30 = 3,000 RUB
Oil @ USD80 // USDRUB @ 42 = 3,360 RUB
More money to spend at home, but less abroad? As a net exporter, a bad thing? Serious question.....
More printed currency but worth less
Yes, future is bright for Russia if they do not let communism F' it all up for them but that does not help pay the bills now. Everyone wants paid - now.
Wage's haven't changed. They are still the same from last year and everyone is getting paid (A lower valued currency to USD does not mean that they cannot pay their own people or even people abroad). Issue now is that because of what CBR did, Russian's are not gonna get their own loans and instead are now relying on China for long term, low interest rate loans. While Ruble isn't the only currency dropping (yen dropped, Rupee semi dropped (very low compared to its value a decade ago), etc), none of these countries increased Interest rates at the rate that CBR did. While Putin stated he will not rescue the Ruble, it appears that CBR is trying to do whatever they can (want) to fix it. But the sad thing is, is that CBR has been doing the same method for years of trying to fight both inflation and devaluation of the ruble, with absolutely no success. The definition of insanity is doing the same thing over and over again, and expecting something else to happen. Ruble value being low is not the problem, it actually has done wonders for certain Russian companies (not oil and gas though). Problem now is that the biggest issue Russia ever faced for businesses is the lack of long term low interest rate loans, and what CBR is doing is going against what they wanted to do (give long term low interest rate loans). Since loans from west are no go now, all new loans are coming from China.
Here is something interesting: http://www.finmarket.ru/main/article/3851515
For those who cannot read Russian, it pretty much boils down that there is talk to bring QE to Russia, and have long term loans at 0% interest rates. I dunno if this will work as I hear that it has quite a few cons with US. But if that is what they have to do, then so be it. Since majority of Russian consumer products come from China, and they have now agreed on a Ruble to Renmimbi transactions, the Renmimbi is worth 7 to 1. So not nearly as a major issue for Russian citizens as most of their junk comes from China. But for future, it is going to be very difficult for them to afford european and US goods (Well, majority of US/EU goods is food, with Germany and US selling industrial goods like automotives).
As Ruble has not dropped nearly that of the Rupee, it sure seems like it is headed that direction. CBR is technically not controlled by the Russian government as it is private. But as much as people here call Putin a dictator, he has no power to get rid of the people in CB unless he had popular support over it.
Only options I have heard from others, that make sense, to bring Ruble value up, is to force trade of oil, gas and metals (major exporter to west), in Rubles. But they are refraining from that for whatever reason. Instead, it is direct sales between each others currencies (so for china, it will be Yuans coming in). I don't know what they are doing, but these moniterists are the same as Kurdin was in his time, and his way of handling the economy was: "Trade and sit on the cash under a matress" (not literally, but pretty much a simili).
Chessplayers n all.
(opens in new window)
Russian TV channel HTB just reporting it at 41.96/ Of course it does not say how many billion were shoveled it (perhaps all the Ukrainian pre-pay from the EU and IMF).
time to buy ruble?
Time to buy PM's. Fuck the ruble
Putin doesn't get it! He needs to set the interest rate to -1% then his currency will be on fire....as the new postive is negative. The lower your interest the more wall street wants it! The new green is RED!
You guys at ZH must be so furious right now. Rates for Russian bonds are screaming higher. Inflation and shortages in Russia growing. US and Japan at record market highs. Rates at all time lows. Manipulation or not, how can you tell who is winning the economic warfare? Is this really what you think Putin envisioned victory would look like?
Before you preen away all your plumage to nubs, remember Russia thought nothing of 50 million dead in WW1-2.
"Russia thought nothing of 50 million dead in WW1-2."
Not so - they had no choice they were backed into a corner and their only way out was forward.
All die or many die - the decision is easy.
Stupid inane post.
Soviet was never a Russian construct
From 1917 thru Stalin was never Russians in control
Stalin was not a Russian.
Even Kruschev and Breznev were Ukrainian
And Gorby half Ukrainian
all run from London
So what you are saying is that Russians are too stupid to govern themselves and need experts from the outside?
Well, the USA is run by a black community orginizser from Kenia right now so...
No those are your words, goat...
People are forgetting that majority of the economic policies still in place are from the 90's with the exception of the mineral tax. CBR was privatized in the 90's and the rest of the country holds hostage economically to their policies. They have been doing the same thing for over a decade, increase interest rates to try to fix the value of the Ruble and Inflation, and all those times, they have failed miserably. Now they tried it again, at even more extreme rates. But problem is, it failed again. What they are doing is insane and it has to come to an end. They need to either come up with a way of fixing the Ruble to something (like all future sales are done in Rubles, or its Gold reserves are tied to the Ruble, or all metals, oil, gas, etc...). But instead, they want to free float, but then they are tyring to save it..... What CB is doing is everything against what they want to do. If the Ruble falls to that of the Rupee, so be it. But increasing interest rates and hoping for a different outcome (compared to all previous attempts), is just ridiculous.
Russia may be a military power, but till they can sort this mess regarding interest rates and loans, they will be at the whim of the west and China.
Here is a kicker where people in Russia should be revolting against CB and getting those in charge there under a noose: CB owns over 50% of Sberbank, largest bank of Russia in terms of Forex (over $400B). Technically, under the old laws, CB is not supposed to have control or stake in any bank, and only makes the policies regarding rules/regulations of banks. But since the beginning of this year, they have canned a large number of banks (over a dozen) but Sberbank is untouched even though they been moving a lot of money out of the country.
Yeah.... back when their country was actually growing, not in today's time of a declining population, which leads to immigration into Russia, and that's something they absolutely HATE.... whether it's Ukrainians, Moldavans, Kazakhs, or the dreaded Chinese.
They also had a lot of subhumans (to them) from central asia, mongolia, present-day 'stans, nd the Caucasus to throw under tanks then, too.
It's easy to see by their reaction what exactly the Nashis feel.
"Inflation and shortages in Russia growing. " -- Not for any of the Russians I know. Most abandoned the Ruble in 1990. Do tell, provide some data. Anyone can pull shit out their ass.
I thought that many learned to grow their own food and become more self-sufficient after seeing what could happen under the rule of Jewish Bolsheviks.
I could be wrong.
Many Russians to be saying of the centralized forms of power that seem to draw in secular versions of members of the messianic Tribe that fancy themselves as fit to rule the goyim, "America, we just learned that lesson. What are you doing?" Or they think that they learned that lesson. Their cultural leaders like Solytzein or whatever his name was could hardly criticize the Jews for their leading role in Communism. But if a Jew stubbed his toe thousands of years ago, that must mean that the goyim are about to blow his entire nation up. Everything is an existential threat, etc.
I could be wrong about Russians rejecting their old culture and the way it was cultivated by Jews. Culture is a tricky thing... so we come to the Frankenstein Monster of Victoria Nuland/Nudelman working with the neoNazis in the Ukraine, etc. Not that the original Nazis had any problem working with Zionists either.
I don't know. People are dumb and... Culture > Physical Reality in their minds. So when they all jump off a cliff together, they may never even realize anything. There could be whole fields of headstones and graves left as monuments to the stupidity of jumping off a cliff and many still wouldn't realize anything. Indeed, they'd probably cultivate a culture of celebrating it. Real. Dumb.
Killed by stupidity.
But if a Jew stubbed his toe thousands of years ago, that must mean that the goyim are about to blow his entire nation up.
This cannot be taken literally enough.
http://naturalhomes.org/naturalliving/russian-dacha.htm
Dacha gardeners feeding 40% of russian nations food.
Invest in freedumb and lies for the "Win." Mission Accomplished. Etc.
It's not right. But it's the way people are in general, something that the Tribe seems to have generally realized collectively a long, long time ago.
The internet may be an interesting wrinkle just like the ideas and inventions of the Founders that it has some good synergy with, though. A bankster once said, "Not one man in million will figure out this scam." And who are they going to tell, the "media"??? But what if it only takes one in a million or a few in millions and they can tell the entire world? So I'm not sure that you're correct. The world or the goyim/tribes from a Jewish perspective are already "waking up" to the nature of globalism more and more, seems to me. But it's like watching an American election where people at the base of each political party may almost want to criticize the Tribe. "You first... no, you first..." Because they all jockey for position against each other within their own "parties"/tribes and races.
So then the question is, how bad will they let their servility and domination by the Tribe (the so-called "1%" at Goldman Sachs, etc.) get because they want to "win an election" or jockey for position against other goyim while making more false profits for themselves and their political party/tribe financed by the Tribe? The apparent answer? They'll let it get pretty God damned bad. Seriously. But with the whole, "You first... no, you first..." thing. Well, apparently Russia is going, there are thousands of people behind Putin ("another Hitler). Generals, intellectuals, chess players, the Orthodox Church, the hundreds that signed on to a letter condemning Jewish hatred, Jewish tribalism and Jewish incitment ("hate speech") that became thousands of leaders that signed a petition. Etc. It seems unlikely that they signed on because they thought it would actually work. They probably signed on to point out the hypocrisy of the Tribe incessantly trying to organize to police the goyim based on "political correctness" while failing to deal in an organized way with their own tribalism, hate speech, incitement and racism first.
Logs and specks. As someone once put it.
All this does is force Putin to move faster to a PM based and backed economy.
Unintended consequences and all that....
Kleptocrats love gold-- for them.
And they love fiat money-- for you.
Why on earth would they want to give you gold when you are willing to accept paper instead?
Do you think they are actually idealists out for the betterment of mankind?
Not too sure of the balance of payments, but they sell oil and natural resources, right? Why not for gold, to assist in their goal of increasing their gold amounts?
Personal consumption expenditures (PCE) decreased $19.0 billion, or 0.2 percent
( Crickets chirping )
Japan is trying to save itself by weakening the Yen.
Western CBs are attacking Russia by weakening the Ruble.
Bizzaro world, or what?
BRICS vs NWO.....
russia should lower rates in order to stimulate local production (in the view of sanctions they need local producers to step in)
instead they hike the rates WTF they are thinking? Being afraid of bankrupties of overleveraged banks and companies ?
Weak currency demands higher rates.
No one will buy your bonds if you do not raise rates.
Cash flow, cash flow, cash flow.
this move was clearly designed with the middle-class and wealthy russian in mind, i.e. the ones with some spare cash savings. the message is the following. if you repatriate any USD or forex you have, you can make ~9.5% (less bank costs) in a demand deposit account, compared to <0.25% in USD or EUR accounts. similarly, if you have been tempted to convert RUB into USD because of the recent forex trend, now the interest you earn on bank deposits will roughly pay for the level of inflation. in other words, real deposit rates in RUB are now close to 0, whereas real deposit rates in USD are still negative (relative to US CPI). the decision is still yours: choose what you want.
they didn't change the intervention rules because they are happy for anyone who wants RUB to get a better price. obviously they are not like the BOJ, which is trying to maximize market impact with policy/jawboning before their own folks (pension) can buy. if the BOJ had say, waited a month before changing policy, then the pensions could have bought their fill of stocks before the 6% move rather than now having to do so afterwards. simply retarded. russia wants their own folks to repatriate RUB at good prices.
the icing on the cake is that the entities that are buying USDRUB i.e. shorting the ruble (i presume western banks and hedge funds, but could include other speculators) are effectively going to the ones funding local russian's bank 9.5% deposit interest... i.e. you have to pay the negative carry (i.e. roughly the local overnight rate plus a bank fee) when you short a currency.
when the geniuses who are shorting rubles figure out that it is one of the only currencies that offers a flat real deposit interest rate or better, they are going to have fun trying to unwind into locals who now have .095 reasons per ruble per year not to buy any forex.
And where, exactly, are Russian banks going to find an invesmtent inside Russia that pays 15-20% annually in order for them to cover their expenses and forward 10% to their depositors?
Average credit rate banks give clients is 20-30%. Mortgages last year, absolute lowest, were 12-13%.
So the banks got a way. Other folks will buy real estate or invest in business or just spend it, as have the Russians done for the last 20 years.
An economy based on immediate spending before the money falls further in value or gets hijacked, no savings, and ruinous interest rates equates to a cadet version of Zimbabwe-on-the-Volga rather than the happy, healthy, virile Motherland so unconvincingly touted by the Okhrana around here.
A 20-30% credit rate requires a very healthy and steady income to service it-- which western sanctions and oil market manipulations are ravaging. Can't go on for long.
been 20% for borrow for years....and more
Must be very healthy and steady income servicing then...cos you said so
I doubt you know anything about this subject.
Russians normally do spend money they do not have
Russian banks have high credit rates and short payback periods because, well, they still want the money paid back.
Western banks have low rates and extended periods because, well, they don't want anyone to try to pay back the loans. Because then the whole house of cards will fall.
Russians don't borrow money at 20-30% unless they have a really good fucking reason. Which is why they aren't debt slaves. Putin's macro behaviour accurately reflects the micro behaviour in the country.
agree
FX Reserves tumbling, rates bubbling, Russian shoppers grumbling, Puti humbling.
The game of chess is seemingly highly overrated.
Ladbrokes is now quoting odds on Puti getting Ceaucescu'd.
Dear General Wingate, I see the Okhrana hates you for speaking the unspeakable-- i.e., the truth--about Mirova Putinova. Keep up the good work.
Yawn... Just talked to the In-laws in St. Petersburg and they haven't noticed any significant disruptions in product availability or prices since the West, their pet MSM, and their hook-nosed money changers started all of their chest-thumping BS about sanctions and devaluing the Ruble several months ago.
Lesson to the wise.... Don't believe everything you read and hear from the West's propaganda machine.
There is a decline in some basic foodstuffs, especially cheeses. Otherwise just slower consumption, from a culture that is consumes quite quickly (new cars every two to three years, for example, because that's how long the warranty lasts in Russia).
For sure, on the cheeses part, especially. Also on the processed meat stuff... meaning stuf from livestock, not the cat/dog products known as cheburekas or beliashas.
I see the trucks at the grocery stores with Belarus and Russia license plates, and half the clients at the business consultancy/accounting form I work for live in Russia... They pick up 500 Euro notes to hold, and even more Benjamins for use in Russia... they LOVE Dollars.
Everybody knows what's going on, but nobody DARES to talk about it in the street... like Soviet times...
As if some proud former Soviets are going to admit to their western in-laws that everything is working against them just as engineered....