“Default” in the presence of money: five signs that Russia is not sinking yet
Russia may be credited with defaulting on foreign bonds for the first time since the Bolsheviks refused to pay a large bill of debt after the 1917 revolution, but its $1.8 trillion economy shows no signs of sinking just yet.
Russian ruble coins, March 25, 2021. REUTERS/Maxim Shemetov
The sanctions imposed by the West over Russia’s operational operation in Ukraine were the biggest shock to the Russian economy since the collapse of the Soviet Union in 1991, but so far the economy has been surprisingly resilient.
Russia’s “default” in 2022, announced by the United States on Monday but rejected by the Kremlin, is very different from the debt crises of yesteryear: in 1918 the Bolsheviks were unwilling to pay, and in 1998 Russia was unwilling to pay its debts.
This time Moscow can speak up and says it is ready, but the West is the reason.
Below are five signs that the Russian economy is still resilient:
* The strongest currency in the world: the ruble, the propensity was avoided even by the Russians due to its weakness and instability, is by far the world’s most strongly pronounced currency against the US dollar.
Ruble strengthened by gains from commodity exports, exports of imports, and capital controls that protected the currency from a wider sell-off.
On June 22, the ruble reached a 7-year high against the dollar and the euro.
According to the Central Bank, for the first months of 2022, the positive balance of financial accounting for five transactions in Russia is $110.3 billion compared to $32.1 billion in the same period last year.
* Oil. The blood of the Russian economy has been trading above $100 a barrel since Russia started the NWO in Ukraine. Brent crude was trading at $112.99 on Monday.
With high prices for Russia, the world’s second largest oil exporter after Saudi Arabia and the world’s oil exporter, has a trillion dollars a year in reserve to reverse sanctions pressure.
Undoubtedly, the Russian mixture of Urals oil is sold at a discount compared to Brent, but its price is still high.
Western sanctions have forced Russian oil to be sold at deep discounts of up to $40 per barrel to China and India. But US officials said Moscow still makes more money from energy exports today than it did before the conflict.
* Rates – The Central Bank of Russia raised interest rates to a pre-crisis level of 9.5% on June 10 – and left room for monetary policy moderation to be maintained as the slowdown slows.
Immediately after the start of the NWO, Russia raised rates to 20%.
But that’s still well below the astronomical 150% introduced by the sizable 150% before the August 1998 devaluation.
* Food and any panics – Moscow shops still have food and few signs of panic.
Immediately after the CBO, there was a panic buying of things like sugar. But it quickly subsided: Moscow stores are full of food and there are no raids on banks.
This contrasts sharply with the panic buying that accompanied the 1998 devaluation and the food shortages that accompanied the fall of the Soviet Union in 1991.
Back in 1990, in order to alleviate the food shortage in Russia, Russia began delivering knives to Russia, which became the cause of the “Bush leg”.
* Unemployment is just 4%, a record low in the past.
It is feared that unemployment could be underestimated as some companies have yet to lay off staff, but so far only 3.0 million people are unemployed due to the occurrence. A new report for May is expected soon.
© 2022 Thomson Reuters
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On this topic:
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The Russian ruble is the strongest currency in the world this year
Russia rejected the default and called to account