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Russian Ruble Is World’s Best Currency This Year (bloomberg.com)
43 points by prostoalex 34 days ago | hide | past | favorite | 34 comments



How about article a week later https://www.bloomberg.com/news/articles/2022-05-17/in-ussr-f...

>For Boris, a doctor based in Moscow, the search got so desperate that he pondered a high-tech, and seemingly improbable, black-market scheme that a friend was pushing.

>After interacting with a bot via messenger app, his acquaintance transferred rubles electronically to receive a barcode that he scanned to access a safe storage box at a Moscow mall.

>The 1,000 euros ($1,040) he’d ordered were sitting inside.

Reminds me of Poland under Soviet occupation. Official exchange rate in 1981 1 USD = 3 zł, real black market 1 USD = 400 zł. 1988 1 USD = 300-500 zł, real 1 USD = 2000-3500 zł. In 70-80 you could only buy a limited amount of dollars when being send on official business as part of state or state company representation, the limit was between 10 USD at the start of 70ties and 130USD at the end of 80ties. Of course you couldnt just pay using official bank exchange rate, there was another special much worse rate just for this purpose :).


A 15-20% spread between official and unofficial exchange rates is relatively small, compared to your Polish example. Right now, it is more or less impossible for any Russian to a) use the dollar to buy anything from outside Russia, and b) travel outside Russia to buy anything in the first place. That greatly reduces the demand for exchanging rubles for dollars.

This is true, whether via official or unofficial means. Consider Argentina (which rootsudo mentioned), a country that for years has had its own serious economic issues. A huge skew between the official and black-market exchange rate for hard currency, such as in Argentina (the "dolar azul"), exists because a) there are capital controls but b) it's still possible to use those dollars/Euro/Swiss franc/whatever. Argentineans are free to use the US dollar to buy things, both inside and outside Argentina. This is not true for Russians.


OT, but... When and why did people start writing "70ties" and "80ties" instead of "70s" and "80s"? The "ty" sound is already in the number 70 so under what logic does it make sense to talk about the "seventyties" and the "eightyties"? Or is it just a hipster tic to make me, who was alive in both those decades, feel like an old fart?


Maybe op is not an English native speaker?


Considering that he wrote zł instead of zl or PLN, op is a Pole using Polish keyboard.


If I am not mistaken (and neither were the people who told me that), there was a per diem for the travel. Which means that you were better off not spending the food or hotel money but manage a different way (say, take your food with you). With these differences on rates this was really making a difference.

You could also spend this money in special skips with western items (called Pewex IIRC)


This is a common thing around the world today, just look at Argentina and Sri Lanka. There are two rates, the bank rate and the market rate. Nothing new, and nothing unique to "Soviet" occupation, it is still a very serious issue in unstable markets.


I can make my own currency, and call it "the best performing currency of all time". This is just what the russia gov has been doing.

1) The gov has forced companies to exchange 80% of their external income to rouble.

2) The gov has used billions (from their own war chest) to prop the rouble.

3) Inside russia, you really can only use RUB as, there is a wide ban on sales of foreign currency. (The ban might be in the form of ridiculous exchange rates)

4) The black market has a completely different exchange rate than the banks do.

5) Global trad volume is down to near zero.

https://www.poundsterlinglive.com/data/currencies/usd-pairs/...

(Scroll down for trade volumes)


Also, internal inflation is well into two-digit zone already, although there is some disagreement as to the exact number. And this inflation is being propped by the fact that many products are simply unavailable, e.g. car manufacturing collapsed.


Are you talking about Russia or s/Europe(an Union)/the West here?


Due to outside countries refusing to sell their products to Russia, the demand forforeign currency in Russia actually fell. Moreover, the legal limitations on currency trade there means that the conversion rate is not true. This is why Russia wants payment for gas in rubles. If the conversion rate was true, they would convert the euros to rubles themselves. But instead they want Europe to pay for the difference.


"The conversion rate is not true" ... reminds me of when my dad traveled to Angola in the 1980s and there were currency controls in place.

Government workers there would be paid in the local kwanza currency which at the official conversion rate would seem to be reasonable dollar-wise given local black market dollar prices for goods. However, nobody wanted kwanza at the official government rate, and instead a dozen eggs might cost a month's government worker salary at the real, unofficial conversion rate.

To make ends meet a government worker would need to leverage their access to rare goods. To maintain the fiction of the official rate the government would offer a limited supply of rare goods (eg pharmaceuticals) to government workers in special commissaries. Workers would buy these supplies at the official government store kwanza rate and then sell them for dollars on the black market for their true local demand black market value. Then they could buy eggs for fewer hours of work.

It was a very precarious, risky, and time consuming operation for these workers.

Incidentally in 2017 Luanda, Angola, was the most expensive city in the world with a 2-bedroom flat renting for US$6800 monthly. Still inefficient.


>Moreover, the legal limitations on currency trade there means that the conversion rate is not true. This is why Russia wants payment for gas in rubles. If the conversion rate was true, they would convert the euros to rubles themselves. But instead they want Europe to pay for the difference.

I don't understand. Europe is paying for gas in rubles at face value. You say rubles are worth less than face value. So Europe is paying for gas at less than face value. That seems like it helps Europe, not hurts it.


The rubble is worth less than conversion rate, so the buyer forced to convert at the conversion rate is getting a bad deal. He's paying more for a ruble that should be cheaper to buy.


Why is Europe forced to buy rubles at the official conversion rate? Why can't they buy them at the real rate?

Even if Europe has to buy rubles at the official rate, I still don't see the problem. They use the rubles to buy oil priced using the official rate, so that just undoes the conversion.


The contracts were signed in euros. Rubles for sale on the market are controlled in large part by Russian entities. They've been artificially limited in making rubles available, driving up the price of the ruble.


If the contracts were signed in euros, then that's even better for Europe. The more the ruble goes up in value, the lower the oil price goes.

E.g. if they signed at 1€/gal when €1=10 rubles, then rubles double in value so €1=5 rubles, the price of oil goes down from 10 rubles/gal to 5 rubles/gal.


> But instead they want Europe to pay for the difference.

And they will pay, so why not? What other sanctions can be put on Russia?


~15% of the world's population is refusing to trade with Russia. The other ~85% has no such restrictions.


Population numbers are irrelevant here. The countries refusing to trade with Russia supply the world's industrial technology, including parts such as chips, and systems such as what Siemens makes. Russia can't use central African industrial control systems to replace Siemens ones. They just don't make them in the Congo.


It makes sense (in retrospect; I am certainly not an analyst who predicted this beforehand).

Right now, it is more or less impossible for any Russian to a) use the dollar to buy anything from outside Russia, and b) travel outside Russia to buy anything in the first place. That greatly reduces the demand for exchanging rubles for dollars.

This is true, whether via official or unofficial means. Consider Argentina, a country that for years has had its own serious economic issues. A huge skew between the official and black-market exchange rate for hard currency, such as in Argentina (the "dolar azul"), exists because a) there are capital controls but b) it's still possible to use those dollars/Euro/Swiss franc/whatever. Argentineans are free to use the US dollar to buy things, both inside and outside Argentina. This is not true for Russians.


No, pretty much travelling to Turkey, Serbia and so on is possible, and if you have visas to other countries, you can go there and use UnionPay cards to get USD from your account. It's just very expensive and much less people are doing that.


Many other countries have stopped issuing visas to Russians.


I feel like goalposts are being moved, many excuses present and ideas that 'we should just wait a few months and Russia will collapse". There was a lot of talk after the war started and sanctions implemented that Ruble will collapse and that's it for Russia. Both from politicians and economists. The opposite happened. Russia seems to be doing just fine and we're all struggling.

5 year high today for Ruble. I just don't know what to think.


This isn't a win for the Ruble, its a loss for public markets. Ticker prices for many assets are frequently very disconnected from reality, especially in any interesting/exceptional circumstance. Another example is the recent halt and reversal of trading in nickel futures.


If one has to pay rubies using official rate, and … it would be high.

It is 1 year later that matter for this kind of sanction. It is better to fight an economic war than nuclear.


This is from May 11th, a lot has changed since then.

It's also fraudulent, as the article states.


Yeah, a lot has happened, only supporting the ruble though like reaching a 7-years high against the euro.


> It’s also fraudulent, as the article states.

That’s not what the article states, it says it’s a rate that is not accessible to most traders. ie a FX desk at a Western bank probably can’t get those rates, as it probably involves dealing with the Russian central bank by having a ruble account which is against sanctions.

There’s a difference between fraudulent pricing vs. new quoted price due to supply/demand order barriers and/or mandates.


> Strategists say the rally isn’t credible as many currency-trading shops have stopped dealing in the ruble on the grounds that its value seen on monitors is not the price it can be traded at in the real world.

This means "fraudulent" as in, "Russia is manipulating its own currency's value."

There is a difference between fraudulent pricing and changing pricing, I agree. This is fraudulent pricing, however.


>This means "fraudulent" as in, "Russia is manipulating its own currency's value."

No, snake_doc is right. The black market rate is only 15-20% higher (as per the Bloomberg article from a week later mentioned elsewhere), which is a relatively small spread for this sort of situation.

Right now, it is more or less impossible for any Russian to a) use the dollar to buy anything from outside Russia, and b) travel outside Russia to buy anything in the first place. That greatly reduces the demand for exchanging rubles for dollars.

This is true, whether via official or unofficial means. Consider Argentina, a country that for years has had its own serious economic issues. A huge skew between the official and black-market exchange rate for hard currency, such as in Argentina (the "dolar azul"), exists because a) there are capital controls but b) it's still possible to use those dollars/Euro/Swiss franc/whatever. Argentineans are free to use the US dollar to buy things, both inside and outside Argentina. This is not true for Russians.


So in other words, Russia is artificially inflating the value of its currency in a way that doesn't represent (misrepresents) its value to the rest of the world and indeed to other Russians?

This is what people call "fraudulent".


It is categorically incorrect to keep referring to the policies as fraudulent.

Russian’s enacted capital controls protects the value of the ruble internally. Had they not enacted capital controls and the central bank not intervened, the Russian people’s existing ruble would depreciate much faster. These are protective measures against the effects of sanctions, with real positive benefits domestically that regular Russians enjoy.

It’s not fraudulent because domestic Russians mostly benefits from the propped up currency. Without it, domestic economics would plummet and regular Russians would face harsh economic outcomes. The central bank works hard to prevent that outcome.


Currency manipulation is not fraudulent. It is a well accepted and studied sovereign tool in monetary policy. Geopolitical dynamics may deem it unsavory, but it is a tool that is grounded in supply and demand dynamics. A failed manipulation strategy leads to a country’s default.




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