Russian rouble dives despite shock rate rise to 17%

[Bosonic]

Last edited Tue Dec 16, 2014, 08:33 AM - Edit history (2)

Source: BBC

Russia's rouble has fallen to a new record low despite a dramatic interest rate rise by its central bank.

It increased rates from 10.5% to 17% in an attempt to boost the currency's value against the dollar.

The rouble has lost almost 50% against the US dollar this year as falling oil prices and Western sanctions continue to weigh on the country's economy.

The rate rise helped the rouble to 58 to the dollar early on Tuesday but the dollar now buys as many as 75 roubles.

Read more: http://www.bbc.co.uk/news/business-30492518

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http://www.bloomberg.com/quote/USDRUB:CUR

Rouble in freefall as Russian crisis escalates - business live

http://www.theguardian.com/business/live/2014/dec/16/uk-bank-stress-test-results-live

[Arcadiasix]

1. Money can be a weapon too

[big_dog]

20. Russia risks Soviet-style collapse as rouble defence fails

In Washington, the White House said it had no intention of easing pressure on Russia to halt the freefall. "It is president Vladimir Putin's decision to make. The aim is to sharpen the choice that he faces," it said. President Barack Obama will not veto a law passed by Congress imposing a raft of new sanctions against Russia, even though he warned previously that it goes too far for European leaders and risks splitting the trans-Atlantic front. The measures include $350m of military assistance to Ukraine, and authorize Mr Obama to impose curbs on energy companies investing in Russia, as well as to prohibit credit to Gazprom.

Sergei Lavrov, Russia's foreign minister, said it is now clear that the US aim is to topple Mr Putin through "regime change" but vowed that the Russian people would rise in defiance. “We have been in much worse situations in our history, and every time we have got out of our fix much stronger,” he said. After years of bluster and suggestions by Mr Putin that the US is a paper tiger, the Kremlin is now coming face to face with the cataclysmic consequences of what it has done by invading Ukraine and changing Europe's borders by force. By the same token, Washington needs to move with care since it would be a geostrategic miscalculation of the first order to push a nuclear-armed Russia too far into a corner, or to perpetuatue a cycle of grievance.

Anthony Peters, from SwissInvest, said Russia's leaders had misled their own people and have until now been in denial about the crisis engulfing them. "Not since Soviet times have we seen such steadfast refusal by the Kremlin to acknowledge the presence of severe political and economic problems while sacrificing the people in the name of orthodoxy. The Russian people are legendarily stoic in the face of hardships but beware if, and when, their patience runs out,” he said. http://www.telegraph.co.uk/finance/economics/11297770/Russia-risks-Soviet-style-collapse-as-rouble-defence-fails.html

[Duckhunter935]

2. Russia starting new

military exercises down south by Ukraine. This is even when the other ones are still going on with many Russian soldiers dying in those exercises.

[quadrature]

3. this story is garbage

Russia can still print all the
Rubles it wants to.

'Friends of Vlad' get USDollars
at preferred rates.....Remember, you read
that first on DU

[karynnj]

19. No it isn't - If Russia prints a huge number of rubles, the ruble will fall again in proportion

Then anyone in Russia holding rubles or on a fixed income, will STILL find they do not have enough money to buy things. That is a recipe for hyper inflation -- something Russia has abundant experience with.

Vlad may be able to give a relatively small number of Russians dollars at preferred rates -- but he does so at a loss and it is unsustainable long term.

YOU can say you read this on DU.

[Recursion]

4. That's below the Rupee, which is never a good place to be (nt)

[pampango]

5. Putin/Reagan - sky high interest rates cause recession, invade small neighbors to restore fear of/

respect for the country and 'national pride' within it, hike military spending while slashing safety net spending, 'stand up' to foreign 'boogeyman' to show your toughness. I think the neocon play book is pretty well known.

[Adrahil]

13. I think they are out of ideas...

They tried buying Rubles to stop the decline... didn't work. They tried modestly raising rates.... nada.

Their tool box is shallow, really. No one wants Rubles right now.

The good news for them is that the Ruble is now undervalued. It's sure to come back, though it will take a long time to reach equilibrium. But the economic damage of this is serious, and not even Vladimir Putin can laugh it off. The high interest rates and low oil price are going to absolutely CLOBBER Russian economic performance in 2015.

[GliderGuider]

6. Thanks to a stew of influences, one of which is American fracking.

The rise in American oil production is causing a steep reduction in American demand on the international oil market, which is a key source of Russian revenues. That demand destruction is increasing by an additional 1.2 million barrels per day each year. This is one of the factors that has crashed the oil price, and put Russia behind the eight-ball -along with Iran, Nigeria and Venezuela, Mexico, and soon Canada.

[quadrature]

9. the good news keeps on comin'...Ruble . 73 to the USD....nt

[DetlefK]

7. Very dangerous move: Attracts short-term investment, kills long-term investment.

Foreign investors will deposit money in roubles, giving the banks money.
But nobody in Russia will borrow money at this rate from the banks to invest in the economy.

[Adrahil]

8. Not to mention, it cripples domestic borrowing....

.... That's gonna hurt.

[muriel_volestrangler]

10. Now at 72 to the dollar, after being at 80, and 100 to the Euro

Last edited Tue Dec 16, 2014, 10:37 AM - Edit history (1)

The currency speculators smelled the blood in the water, and have closed in for the kill.

[tabasco]

11. Russian worship of Czar Pooty Poot the Conqueror

Will it continue?

[meow2u3]

12. DUzy

Czar Pooty Poot....

Too funny!

[Tarheel_Dem]

15. If they're only getting state sponsored news, I'm gonna bet that "Russian worship" continues.

[onehandle]

14. Let them sink. nt

[Tarheel_Dem]

16. Couldn't happen to a smellier asshole. "Pooty Poot".

[your bunny wrote]

17. i selling roubles , who wants buy?

[joshcryer]

18. Few short months ago Russia's power was unmatched.

They were considered unstoppable, they laughed at American sanctions, they scoffed at market deals with the EU or US, and instead claimed their powerful relationship with China would usher in a new Eurasia for the world to bow at and tremble.

Good times.