Russian rouble near 5-year highs | Hacker News Reader

Russian rouble near 5-year highs

reuters.com

9 pointslxm13 comments

Just because something is expensive, doesn't mean that there's demand. If Europe starts paying Russia for gas in roubles, watch as the rouble falls back to earth (as demand forces it to find its level).

>Just because something is expensive, doesn't mean that there's demand.

In this case, yes, this is a country currency not some niche token or whatever, this is a liquid asset.

Europe is paying for gas in roubles. Which means they have to get roubles from somebody Russian.

But since there is nothing that Russian can buy with Euros they are going to have to give a lot of Euros to get the roubles in the first place.

Demand and supply will find a level but it will be the rouble that strengthens.

fall back to earth? pretty sure more demand for rubles would only add pressure for it to go up, other things equal. TFA seems to hint as much: "It was unclear whether President Vladimir Putin's demand for gas payments in roubles had also supported the currency"

I am sure this is not because Russian oligarchy is trying to move all the stolen money back into Russia because of fear it being confiscated in the west.

No, it's because of capital controls and central bank support. Selling rubles is very nearly forbidden for Russians, and the central bank has spent $50B on supporting the ruble.

I don't understand the latter. What's the point of doing that? It's a very great deal of money, so there should be some really good reason.

Paul Krugman's guess[1] is that since Putin wants to sell a smoke-and-mirrors idea of "Everything is fine, Russia is winning!", having a number (the exchange rate) not match his bullshit would mean an obvious "This guy is full of shit" to anyone paying attention. So, he's made the central bank boss[2] (a respected competent lady, who rumors say tried to quit but was not allowed by Putin) do anything she could to make it look decent.

[1] https://www.nytimes.com/2022/04/01/opinion/russia-ruble-econ... [2] https://www.nytimes.com/2022/05/09/business/elvira-nabiullin...

How can the central bank have done that given they are banned from transacting in dollars?

The central bank of Russia has just relaxed its controls on Russians moving money to friendly countries.

https://apple.news/AfMMfcmbfTHS_nbGj96-nRA

Isn’t it just the case that Russians have no need of dollars because they can’t buy anything with them. So they get rid of them for roubles which they can use to buy things.

Demand and supply does the rest.

Their central bank is only sanctioned in about two dozen countries. It can conduct dollar transactions in India, for example.

I assume the sanctions also cover Indian subsidiaries, so the Russians won't be able to trade against e.g. Goldman Sachs's Indian subsidiary. But there are plenty of banks that aren't owned by motherships in the two dozen sanctioning countries.

> It's a very great deal of money, so there should be some really good reason

They were probably outright selling lots of currency during the hot days in Feb and March to stop the immediate exchange rate freefall, that's where the $50B most likely went. Since then, the imports plummeted but the export dollar amounts soared because of high energy prices (despite slightly lower physical volumes), so the curbs and the market took over for now. We'll see what happens next.

Btw: no, selling rubles is not forbidden, as a consumer you could sell rubles pretty close to official exchange rate in April (not sure about now), and they just announced you can wire $50k to foreign banks per month starting today. No idea about larger amounts.

What's the trading volume

Normal or black market?

either one, do you have any numbers?

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