The Russian central bank changes in the fight against the decline of the ruble, the strategy and the exchange rate is free. Fed boss Elvira Nabiullina announced that will respond to their institution on demand “at any time and in sufficient extent” with interventions in the foreign exchange market.
This is particularly true when, because of of speculative price movements threatened danger to financial stability, Nabiullina said on Monday. With the release of the ruble of the Russian currency threatens a renewed fall in prices. This would curtail the purchasing power of consumers in the country massively and fuel inflation -. If the central bank is not against controls
From 2015, the ruble fully convertible be
The change of course in Moscow comes as a surprise, because the central bankers had announced to limit the ruble purchases to a maximum of $ 350 million per day only on Wednesday. This was only a fraction of what the central bank had taken in the past few weeks in the hand to slow the continuing decline of the ruble. You always intervened then automatically if the price of a basket of currencies of euro and dollar exceeds a certain margin for rubles. As of 2015, the currency will now be freely convertible, stressed the central bank. The now announced support purchases could require far greater sums
Putin:. No fundamental reasons for the price drop
Russian President Vladimir Putin, the current weakness of the Russian currency on Monday mainly on speculation returned against the ruble. Fundamental reasons for the market decline of recent times, he did not see any, Putin said on the sidelines of the Asia-Pacific Summit (APEC) in Beijing
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Large risks – especially for the consumer
The release of the ruble exchange rate holds great risks for Moscow. The following could happen
first The ruble falls into the abyss
Vladimir Putin speaks of speculation for rubles. If this increase, the central bank would have to spend billions to support the exchange rate – a difficult and costly venture
2.. Imported goods become more expensive.
Despite the sanctions, the Russians still buy a lot of foreign products. Their prices would – calculated in rubles – to rise sharply when the rate against the dollar and the euro continues to fall
3.. Rampant inflation
The ruble prices for primary products of Russian manufacturers increase if these products are sourced from abroad. These costs will pass on the producers to their sales prices. The result: an increase in inflation. This effect can occur almost overnight.
… and an interesting advantage
4th Russia as a low-wage location
If it is possible for the central bank to lower the ruble coordinated to a certain level and keep it there stable, the country would again attractive to foreign investors. It might be worth then build factories in Russia and to take advantage of the Tsarist Empire as a kind of low-wage country. In this case, the ruble-release would be a clever move.
The reaction of the stock market
The investors trust the monetary authorities but it appears to be to stabilize the ruble exchange rate. After the announcement of the Federal Reserve, the Russian currency waved recovering. nevertheless the ruble still listed against the dollar almost 40 percent lower than the year 2013/2014. For € he has fallen by 25 percent since the beginning.
The Russian economy is suffering the consequences of sanctions imposed against the country because of its role in the conflict, the West Ukraine. Russian companies have increasingly buy dollars because they are cut off from direct access to the international financial markets. That would be even more expensive if the ruble continues to fall.
But Putin said he wanted despite the problems do not increase the debt of his country. “There will be no increase in the national debt,” he said. Also, capital controls in his country concluded Putin from
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