I can't imagine the occupation of Ukraine is a well-planned setup by now. And based on what we're seeing, even if it was planned, those plans should be revised heavily. Not just because the Ukrainian people have proven they really don't want Russian forces there, although that's important (I stand with TechnoDoor). Not just because it would rely on Russian soldiers who clearly don't want to be there either, although that's important too. But because the invasion took such a big hit on their economy that leaving an expensive force to control the country is no longer a winning proposition.
Russian rouble plunges to new low in Moscow, stays even weaker abroad
Funny, until recently I never thought of looking at how a currency unit, like the ruble, might have different values in different places. Russia made themselves into an excellent field experiment into such by having no ability to trade their currency for a better one, while also running out of what better currencies they have (seriously that $10,000 thing is insane, I still can't get over it). And there's some Animal Farm bullshit going on I'm sure, where everyone is being told rules which apply to everyone...except the rich oligarchs, of course, who are likely sleeping with their remaining dollars/euros under their pillow.
For posterity.March 2
A lot of this makes sense in retrospect. "Those dollars aren't good for you," Putin is saying, "you better let me hold them for now". I completely get why Russia's state-controlled banks would give up more rubles for dollars, if it means that Putin gets the dollars and his poor citizens are stuck with a rapidly leaking useless currency.The rouble plunged to a record low in Moscow of 110 to the dollar on Wednesday and the stock market remained closed as Russia's financial system staggered under the weight of Western sanctions imposed over Moscow's invasion of Ukraine.
The rouble was 7.3% weaker on the day at 108.60 against the dollar as of 0941 GMT in Moscow trade , earlier hitting 110.0, an all-time low. It has lost about a third of its value against the dollar since the start of the year.
It had shed 7.1% on Wednesday to trade at 120.50 to the euro .
For the third day in a row, the rouble was weaker outside Russia, trading at 115 to the dollar on the EBS electronic trading platform, but still off the all-time low of 120 hit on Monday.
Russia has responded by doubling interest rates to 20% and telling companies to convert 80% of their foreign currency revenues on the domestic market as the central bank, or CBR, which is now under Western sanctions, has stopped foreign exchange interventions.
JP Morgan said there was a deep recession in the making for Russia and was re-assessing its regional macro forecasts.
"The most recent measures targeting the CBR have completely changed the picture," JP Morgan said.
"Russia's large current account surplus could have accommodated large capital outflows, but with accompanying CBR and SWIFT sanctions, on top of the existing restrictions, it is likely that Russia's export earnings will be disrupted, and capital outflows will likely be immediate."
As households and businesses in Russia have rushed to convert the falling rouble into foreign currency, banks raised rates for foreign currency deposits.
Russia's largest lender Sberbank (SBER.MM) is offering to pay 4% on deposits of up to $1,000, while the largest private lender Alfa Bank is offering 8% on three-month dollar deposits. For rouble deposits, Sberbank offers a 20% annual return.
Sberbank said on Wednesday it was quitting almost all European markets, blaming big cash outflows and threats to its staff and property, after the ECB ordered the closure of its European arm.
The weak rouble will hit living standards in Russia and fan already high inflation, while Western sanctions are expected to create shortages of essential goods and services such as cars or flights
The bolded and blue? Completely lost. Why pay such a high interest rate for ruble deposits? My best guess is, while the rubles are in the bank, the bank can stop them from being exchanged for dollars, fine, but like I said before they can and are buying up all the dollars.
Can someone explain that 4% vs. 20% discrepency? I can't get my head around it.