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[Mictlantecuhtli]

Oh, that must be why the ruble has fallen to all time lows this year and is continuing the drop every session it trades in, despite inflation going from 'only' 7% this year to now an estimated 11%. Sometimes the market doesn't need to act rationally, sometimes all it needs is precedent and a bumbling central government response to target on.



Also, humor me, if the ruble is trading like it is right now with inflation as it is, what do you think will happen if inflation continues to rise [it will, since it's a lagging indicator]?

[FearfulJesuit]

Oh, that must be why the ruble has fallen to all time lows this year and is continuing the drop every session it trades in, despite inflation going from 'only' 7% this year to now an estimated 11%. Sometimes the market doesn't need to act rationally, sometimes all it needs is precedent and a bumbling central government response to target on.



Also, humor me, if the ruble is trading like it is right now with inflation as it is, what do you think will happen if inflation continues to rise [it will, since it's a lagging indicator]?

Strikes me that inflation is certainly going to start picking up if ordinary Russians start hoarding dollars and euros.

[Mictlantecuhtli]

Yeah, and they'll be able to keep their savings in the meantime while the people who have a death grip on their pre-redenomination currency believe it's worth holding as it drops to new low after new low.

Saying people should have rubles in any form right now is downright irresponsible.

 Of course, I've been warning people here to exchange their rubles since they were, what, 38 rubles to the dollar? So what do I know. Lol.

[mainiac]

Inflation of 7% is high by US-EU standards but it's not the same thing as 20% inflation and it's not the same thing as spiraling inflation.

Dont fall into the mental habit where you say.  "X is bad thing.  Y is bad thing.  X and Y are related.  Y is happening.  Therefore X is happening."  That is the path that leads to ignorance.

[Mictlantecuhtli]

I think waiting a bit for it to kick in works better, like it has been, as the inflation rate has steadily risen as the government releases the actual information. :] I expect 20% next year.

[mainiac]

I would be surprised to see 20% next year.

[Mictlantecuhtli]

http://www.bignewsnetwork.com/index.php/sid/228564739

The central bank said inflation could reach 11.5 percent in the first three months of 2015 before easing. At the same time, the bank says that the Russian economy is likely to contract next year.

When the CBR is saying this, it's time to take a long look between the lines.


Oh yeah, and the ruble is now trading in line with the rupee. I believe I called that a few months ago. Next up I wouldn't be surprised if it started racing to the bottom against the yen. Especially since Abenomnomnomics have been solidified with the recent vote.

[mainiac]

Abenomics, the centerpiece of which is an attempt to cause the yen to lose value?

If you start thinking about economics as a tale of virtue and vice you aren't going to be able to meaningfully understand anything.  You will just be right about the direction of stuff half the time.

[Mictlantecuhtli]

[The yen stopped bleeding and jumped on the election news so it's actually true, also relative weakness is relative, and very relevant]

Be sure to let me know how right I am in another 6 months, there. I'm going to go with the fact that the ruble has been precipitously dropping and another historic fall today is an indicator that the CBR is both broken and the Kremlin doesn't know what to do to get it out of this hole. Expecting stabilization in a rapidly deteriorating situation is a prime way to lose out.

[mainiac]

Abe openly talks, at great length about how he has a deliberate policy of causing the yen to fall, the central bank agrees with this policy and Japanese inflation went positive for the first time since the Great Recession started after these policies kicked in.

Currencies are treated as a random walk.  In the absence of new information they are as likely to go up as to go down on a given day.*

*well technically there is a central long term tendency but... it's complicated.  In the short term, random walk.

[Mictlantecuhtli]

And once again, look at the Yen vs the ruble and tell me if the yen has fallen in value compared to it. Some things are obvious even to currency traders.

[mainiac]

If you start thinking about economics as a tale of virtue and vice you aren't going to be able to meaningfully understand anything.  You will just be right about the direction of stuff half the time.

And rapidly lose my interest.

[Mictlantecuhtli]

Yes, the Yen not devaluing against the ruble in this period is indicative of the rubles underlying weakness, even when trading against an actively devalued currency. Thanks for contributing.

[Sergarr]

Any money gained from speculation is essentially stolen from somebody, even if it's not directly apparent.

I could've used the current situation to gain 60% net wealth, but since this increase of wealth is not complemented by any increase in real wealth, it means that this money came from someone's pockets - mainly, the ones who didn't exchange their money.

And because there are always people who live in worse conditions than I do, the loss of their money will always be bigger than the benefits I acquire personally.

Hence, the optimal strategy for a society-at-large is to not exchange, at least not beyond what's needed for actual import/export transactions.

[mainiac]

Yes, the Yen not devaluing against the ruble in this period is indicative of the rubles underlying weakness, even when trading against an actively devalued currency. Thanks for contributing.

So you are claiming vindication because an effect happening the exact opposite of the way you said it would a whole half hour ago is happening at a certain rate.

Gee, you sure put me in my place.