The war continues, the ruble has recovered: Strengthening is just phantom! The world can prosper without Russia, Russia without the world can not – Topky.sk

The Russian ruble strengthened significantly during Thursday’s trading in Moscow. It thus reached the strongest level since February 11, ie before the Russian attack on Ukraine began. Archive VIDEO Martin Hojsík in the EP plenary on the need to impose sanctions on Russian gas Ruble first fell to record lows, then recovered Sanctions imposed on Russia led to the fall of the ruble to record lows, but later the Russian currency recovered. The actions of the Russian authorities, such as a significant increase in interest rates or regulations for Russian companies to exchange 80 percent of foreign exchange earnings for rubles, have contributed to this. The ruble was around 76 rubles per dollar. Since the beginning of the war, it has climbed to 130 RUB / USD. At the end of February, Russia’s central bank more than doubled its key interest rate in support of the domestic currency, to 20 percent from the previous 9.5 percent. In response to Western sanctions, Russia has also introduced restrictions on capital movements. Photo gallery (4) Source: TASR / AP Photo / Pavel Golovkin Strengthening is phantom However, strengthening the ruble does not mean anything revolutionary and should not be seen as a fact that Russia is resisting sanctions in the West. “Strengthening the ruble is to a large extent ‘phantom.’ Since the beginning of the war, several measures have been introduced not only in Russia, the mandatory conversion of foreign exchange into rubles in Russia, restrictions on foreign exchange exports, a ban on the sale of Russian shares by foreigners, but also in the West, which has significantly worsened the convertibility of rubles. It is a similar situation as in our country under socialism. According to Vlachynský, it is a similar situation as in our country under socialism. The “Western mark or dollar” had one “official” exchange rate, but few could buy these currencies, or then the “money market”, a much less favorable exchange rate, but the fact remains that if foreign exchange for gas and oil The Russians have nothing to spend (because sanctions are imposed on them), so the ruble will not fall freely, “he explained. Photo gallery (4) Source: Getty Images The Russian economy itself is facing extremely difficult times. “It has lost a lot of foreign investment and is cut off from much of the world’s markets. It’s similar to the situation in Iran in the last 15 years, only much faster and on a much larger scale. But the example of Iran, Venezuela and North Korea shows that regimes can survive. even in appalling economic conditions, “Vlachynský added. The weakening of the ruble means that Russia has become more expensive imports from abroad “The weakening of the ruble, which occurred, means that Russia has become more expensive imports from abroad. euros and they immediately changed to rubles in March, so they had 60% more rubles due to currency movements, “explains Finlord analyst Boris Tomčiak. The ruble weakened sharply at the end of February and March due to a massive outflow of capital and the efforts of companies and households to quickly exchange rubles for world currencies. “At the same time, a significant portion of the central bank’s foreign exchange reserves have been frozen, undermining confidence in Russia’s ability to repay its liabilities. “The euros and dollars gained from the sale of commodities are almost immediately converted into rubles, so demand for this currency is high,” he said. The world can prosper without Russia, Russia without the world not Russia, according to Tomčiak, resists Western sanctions in the short term, as the West cannot immediately disconnect from commodity imports. “In the long run, however, it has cut a branch. The United States no longer wants to import Russian commodities, and Europe is also making plans to disconnect quickly, even though it is more difficult to disconnect. Over the next five years, dependence on Russian oil, gas and other raw materials will be significantly reduced and sales of commodities to Russia will fall sharply, “he told Topky. Photo gallery (4) Source: SITA / AP / Mikhail Klimentyev, Sputnik, Kremlin Pool According to Tomčiak, the Russian government is still relying on the fact that exports are simply being redirected to Asia, which it needs for its rapid commodity boom. “But Asia will prefer to work with the US, Europe and the cartel in the long run, as these regions have much more stable supplies. The world can prosper without Russia, Russia cannot without the world,” he added. Sanctions do not hurt as much as they should According to the investment analyst FinGO.sk František Burda, not only sanctions but also the war itself led to the fall of the ruble. “In such conflicts, there is always a sharp drop in currencies, stock sales, bonds. But at the moment, it has been found that the sanctions are not as bad as they should be. The ban on oil and gas imports has not come, even Russia is sending us more gas,” he said. Burda added that the Russian central bank used instruments such as raising the interest rate to 20% and selling foreign exchange reserves to stabilize the ruble. Until now, few people knew that a ruble existed. If an ordinary person reads that a ruble has strengthened or collapsed, what is one to imagine? “Truth be told, so far few people have known that a ruble exists at all. An ordinary person can imagine the fluctuation of the ruble as a classic currency movement, which they usually watch and control before a holiday to Croatia or before buying in Hungary or Poland using a currency other than the euro, “explains analyst FinGo.sk. “It is always true that the more a country’s currency strengthens, the more euros we have to spend on buying. The opposite is also true – when a given currency falls, we buy more for euros. Because we get a lot more currency for euros, which we then exchange for our purchase, “he said. Rather, it is an artificial price increase. Many foreign economists say that it means virtually nothing and that the revival of the ruble does not mean that Russia is resisting sanctions in the West. Is it actually an artificial level, as practically no one trades in rubles? “Even though there are efforts to push the dollar off the pedestal of the reserve currency, most transactions in the world are still settled in dollars. Whether the demand for the rubles that drove it to these levels is really real will show time. But it is more of an artificial price increase. when sellers disappeared from the market, “Burda replied, adding that this increase does not reflect the strength of the Russian economy, GDP growth, inflation, employment or lower indebtedness of the country. According to Bloomberg, the Russians believe in Putin’s rapid recovery of the ruble means significant success on the domestic scene for Russian President Vladimir Putin, as many Russians consider the ruble’s exchange rate against the dollar an important indicator of the state of the domestic economy. Russian Finance Minister Anton Siluanov said that his office, together with the central bank, was working on measures that should ensure greater predictability and lower volatility of the ruble’s exchange rate. US Treasury Secretary Janet Yellen said on Wednesday that the ruble’s recovery was not a sign that Russia’s economy was resisting Western sanctions. She added that nothing should be deduced from the current ruble exchange rate. According to Bloomberg, the 20-day average of the ruble’s trading volume has now fallen to its lowest level since 2012.