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[Mictlantecuhtli]

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.

No, you're the one with the fantasy that the Yen won't continue to trade up against the ruble, despite the terrible inflationary sith lord that is Abe being re-elected. Fun fact; stability in monetary policy can make your reforms easier for the market to handle. The yen was bleeding terribly for months up to the election, and the landslide election made it recover.

The policy of active currency devaluation hasn't changed the fact that the RUBLE is continuing the trade down against the YEN massively and at a historic rate, against *the* weakest currency on the market, the heel of all devaluation jokes, the Yen. This is an indicator of the ruble's underlying weakness. This is an indicator that the ruble has plenty further down to go once the traders really sink their teeth in. This won't require any increases in inflation to happen, either, it's simply the trend.

Weakness is relative. And relevant in the currency market.

The next stop after those levels is redenomination.

Thanks for contributing.

[Sergarr]

Why would there be a need for redenomination without a hyper-inflation?

[Mictlantecuhtli]

Well, the current levels are technically all time historic lows, which has been the time when they've issued new rates before, and that was amidst spiralling inflation. Of course, you have to remember after every redenomination it's a new all time low anyway technically.. And like mentioned we're 1 step removed from those days; spiraling out of control inflation. It's increasing at an alarming rate, and if it continues like this in the next year then 2015 will look bad, even by historical standards. But hyperinflation takes time to show a head and less time to ruin everything.

As of this moment the best strategy is to simply let it drop and react accordingly, the bank shouldn't have been spending any money to prop up corridors in the first place. It can be a self fulfilling prophecy to reissue, so I expect the CBR to let the currency freefall at this point and see where it lands..

[Sergarr]

The situation in 1998 was much worse than todays, partially because there was a government-sanctioned attempt at getting more money from population (GKO) which exploded nastily.

http://en.wikipedia.org/wiki/GKO-OFZ <=== these things. The government defaulted on them, which pretty much killed quite a lot of organizations which kept their money in these.

[Mictlantecuhtli]

Yeah, this time around the CBR has been adamant about forcing firms to close down certain bets and stem liabilities. I believe the CBR even forced all banks to close their derivative trades [against? or for? the CBR rates], and pay the billions needed to do it so they aren't exposed to the risks. I'm not saying the CBR is incompetent, just they're seriously running out of options to keep the floodgates from opening like they did today, but they're doing a valiant job of stemming the effects as long as they can.

[Mictlantecuhtli]

CBR raising interest rates 650 basis points, to 17%.

From 16 December 2014 the Bank of Russia Board of Directors decided to raise the Bank of Russia key rate to 17.00 percent per annum. This decision is aimed at limiting substantially increased ruble depreciation risks and inflation risks.

From 16 December 2014 in order to strengthen the efficiency of monetary policy loans secured by non-marketable assets or guarantees for 2 to 549 days will be provided at a floating interest rate, set at the Bank of Russia key rate level, increased by 1.75 percentage points (up to the present these loans for 2 to 90 days were provided at fixed rate).

Moreover, for further expanse of credit institution ability to manage their foreign exchange liquidity it was decided to increase maximum allotment amount for 28-day FX REPO auctions from 1.5 to 5.0 billion USD and to conduct 12-month FX REPO auctions on weekly basis.

That was.. unexpected.

[Sergarr]

Holy shit, radical solutions from Russian state organizations?

Truly the age of change is upon us.

EDIT: I get a feeling something big is going to happen before the New Year's Eve.

[Mictlantecuhtli]

This can be a sign that the inflation numbers are going to be worse than envisioned.. Or it's a direct reaction to today's session drop. Probably both. If this doesn't cause a reversal in the momentum then I don't know what else the CBR can do. The ruble is paring losses from earlier, but it doesn't look like it's going to reverse today's movement.. Strong support at 61.

[mainiac]

No, you're the one with the fantasy that the Yen won't continue to trade up against the ruble,

Gee that would be an excellent point if only it bore the faintest resemblance to my statement.

[Toady One]

I've received a report about this thread.  It would be good if people dialed back the tone into the acceptable-way-of-talking-to-other-forum-people range, so we can hang out and have threads.

[smjjames]

I've received a report about this thread.  It would be good if people dialed back the tone into the acceptable-way-of-talking-to-other-forum-people range, so we can hang out and have threads.

Over the economics stuff??

I don't really see anything that might be reportable, but umkay.

[FearfulJesuit]

I've received a report about this thread.  It would be good if people dialed back the tone into the acceptable-way-of-talking-to-other-forum-people range, so we can hang out and have threads.

Listen up, everyone. (I tend to be pretty laissez-faire about my threads, because I'd rather err on the side of free speech than risk getting involved in flame wars and censoring people, but there are limits...)

[Knit tie]

Mr. Saker, of the eponymous Vineyard, is one of those kinds of people who have a clear agenda but do not lie in order to promote it. Ignoring the more emotional sentences of this post, he is stating that Russian oligarchs are trying to do the same thing now they have done in the 90s: run Russia down, rob it and run.

But there have been some crackdowns on oligarchs as well.


Oh, and speaking of all the predictions of Russia's collapse, I would like to say that I am extremely sceptical of all these "prophecies", mostly because they are nothing new.

[Mictlantecuhtli]

Ruble hits new all time lows starting today's session despite the unprecedented rate hike. 68.8 at the time of writing..

69.1.. 70.73. 73.70. The rout seems to be on now..

http://rt.com/business/214747-ruble-central-bank-nabiullina/

CBR throwing in the towel it seems.

[Darvi]

Hoo boy. We hyperinflation soon?