Private habits of Putin (Russian Crisis)

[CityFarmer]

Russian central bank raises key interest rate to 17% from 10.5% to stop rouble's freefall

Yes, Russian central bank is struggling to stop the fall of Russia's currency, by depleting the country foreign reserves. Pretty fast, IMO.

Base on info from The Econmist, the reserve depleted 20% this year, but I reckon it is much more up-to-date.

http://www.economist.com/blogs/freeexcha...e-reserves

[BlueKelah]

Sounds like this thread is becoming more of a discussion on Russian economy and finance.

Maybe change thread topic to Putin and the Russian economy or something.

17% just sounds ridiculous. Sounds like Russia may default like they did back in 1998 after the AFC and oil tanking to below USD$15. Back then they were having war with chechnya and now with Ukraine.

Wave of defaults might start in Latin America with Venezuela going down before sweeping through the rest of emerging economies ending with, well you guessed it, China which has some forex reserves there as well. Does feel a bit like AFC, deja vu.

[specuvestor]

Follow up post on Russia's "financial crisis" despite their US$400b reserves when the foreign debt is high. Nobody wants Rubles even if Russia wants to print it. Raising interest rate to 17% is inviting the fat lady to sing.

http://www.bloomberg.com/news/2014-12-15...cline.html

"So far this year, Russia has spent $80 billion of its foreign-exchange reserves in an unsuccessful attempt to prop up the ruble, which tumbled past 64 against the dollar for the first time yesterday. The currency’s collapse has evoked the turmoil of the 1998 Russian crisis, an event that reverberated through financial markets around the world."

Actually the 1998 Russian default did not have that big an impact except for LTCM because they just came back to the overseas bond market. This time however I'm not so sure.

A bit OT but a follow up on our previous discussion and how capital flows can affect banks, even Chinese banks. the connection is complex but it can be foreseen.

Nov. 27 (Bloomberg) -- Russia’s biggest state-run banks are
seeing profits plunge, forcing some to seek government help,
after the U.S. and European Union slapped them with sanctions
over the conflict in Ukraine.

<snip>

The problem in Argentina and Russia has no bearing on China. The economic structure and dynamic is so different. Sorry that you have to expand further on Russia devaluing its currency as I don't see anything related to banks yet. If you are talking about how bad the economy in Argentina and Russia, there are too many causes which does not relate to the banks there.

Your question was: "What reserves has to do with the solvency of the mega banks in China?"

Banks being part of the local financial system and global payment system will be affected when there is a cash crunch. Whenever there is a financial crisis the banks get hit first as their interest rate and asset/liablity gets mismatched by the volatility and the underlying counterparty risk increases, their leverage and dependence of capital markets exacerbates their problem.

http://www.valuebuddies.com/thread-5237-...l#pid96247

[opmi]

^^ less Russians tourists will visit SG.


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[CityFarmer]

^^ less Russians tourists will visit SG.


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I recall Russians own lots of London's property. How will the Russian owners do with the current "financial crisis" back in Russia? Hmm...

[specuvestor]

Russian central bank raises key interest rate to 17% from 10.5% to stop rouble's freefall

Yes, Russian central bank is struggling to stop the fall of Russia's currency, by depleting the country foreign reserves. Pretty fast, IMO.

Base on info from The Econmist, the reserve depleted 20% this year, but I reckon it is much more up-to-date.

http://www.economist.com/blogs/freeexcha...e-reserves

"But Russia’s official figures do not tell the whole story. About $170 billion of its assets sit in two big wealth funds, the Reserve Fund (worth about $89 billion) and the National Wealth Fund (worth about $82 billion). But much of what is in these funds could prove inaccessible if called on to meet short-term financing needs.

Some people allege that the National Wealth Fund is tied up in long-term infrastructure projects, which mean that the fund is entirely illiquid. Meanwhile much of the Reserve Fund is used for buying equity in Russian state banks, which again makes those assets much less liquid than cash."

I'm not even sure how can stakes in local currency denominated state banks be counted as reserves?? Only a few hard currency nations have the priviledge of not holding much reserves because their currency IS the reserve

Actually it is not so complicated if I may describe it in simple equity terms: If a stock owns cash that is their "foreign" reserve. Their treasury stock cannot be "reserve" because that is what they can "print" per se.

And of course reserve does not tell the whole picture because you also have to look at the debt composition.

[specuvestor]

Russian index collapsed another 10% today in US$ terms (yesterday down 12%) while rubles lost all the 9% intraday gains. That's what happens when you "openly invite" the vultures to watch the fat lady sing

And why having a credible reserve managment vis a viz foreign denominated debt is crucial in a crisis. Who wants printed Rubles now?

SGD is SGD because we manage it well and on a real basis we have appreciating SGD assets. We really shouldn't take all these policies for granted.

[BlueKelah]

Do you think russia will default again? Sure looks like it the way things are progressing

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[AlphaQuant]

it was a joke but incredible to see it come true - Putin/Brent/RUB are all in their 60s together. (they were 61//100+//30+ at the start of the year vs 62//60//65 now).

Won't be surprised to see blokes putting shorts on oil/micex/rub and letting the feedback loop into each other - the russian CB can't do a 1997-HKMA and i certainly do not see the US granting USD swaps to the russians.

[CityFarmer]

Will Mr. Putin admit defeat, with his personality?

Kerry says Russia sanctions could end if Putin takes right steps

LONDON - Russia has made constructive moves in recent days towards reducing tensions in Ukraine, U.S. Secretary of State John Kerry said on Tuesday, and he raised the possibility that Washington could lift sanctions if Moscow keeps taking positive steps.

Speaking in London, Kerry said the United States and Europe could lift sanctions within days or weeks if President Vladimir Putin keeps taking steps to ease tensions and lives up to commitments under ceasefire accords to end the Ukraine conflict.

"These sanctions could be lifted in a matter of weeks or days, depending on the choices that President Putin takes," Kerry told reporters.

"Their sole purpose here is to restore the international norm with respect to behavior between nations," to ensure respect for borders, sovereignty and rights, he said.
...
http://www.todayonline.com/world/kerry-s...ecent-days