Russia

After a historic collapse in the wake of Russia's military offensive in Ukraine, the ruble has staged a spectacular bounceback, supported by strict capital controls and energy exports. But analysts say that success is in many ways artificial and does not bode well for the health of the Russian economy.The Feb.

24 military operation triggered unprecedented Western sanctions on Moscow, sending the ruble into free-fall and accelerating already high inflation. Four days after President Vladimir Putin sent troops into the pro-Western country, the central bank more than doubled its key interest rate to 20% to prop up the financial system. In a surprise move on Friday, the central bank lowered the rate to 17%, saying risks to financial stability had "ceased to increase" for now."It's clear that the Central Bank of Russia assesses that Russia's economy is now emerging from the most acute phase of its crisis and that such restrictive monetary conditions are no longer warranted," said Liam Peach, emerging Europe economist at Capital Economics.The ruble's return to levels last seen before the start of Moscow's military campaign is a sign that the economy may be adjusting to the sanctions, economists say. 'Exports are solid' Sofya Donets, chief economist at Renaissance Capital, said the ruble recovery has been aided by an unprecedented trade surplus. "There has been a decline in imports, partly because of sanctions, partly because of uncertainty and logistical disruptions," she told AFP."But exports are solid, and with commodity prices high we expect a historically high account surplus of $20-25 billion in March."Oil and gas, Russia's main exports, keep flowing abroad, filling Russia's coffers. The United States has banned Russian oil imports and the EU adopted a ban on Russian steel imports but those penalties have largely spared key Russian exports."It only affects 5% of Russian exports, so it's not that much," said Donets.Robust exports have been supplemented by harsh capital controls introduced by the central bank.The West froze some $300 billion of Russia's foreign currency reserves abroad, a move that Foreign Minister Sergei Lavrov has described as "theft."To counter the sanctions, exporting companies were forced to sell 80% of their export earnings to buy rubles. Russians have also been barred from withdrawing more than $10,000 in foreign currency or taking more that amount out of the country, and foreign investors have been banned from selling Russian assets.'No precedent' The rapid ruble recovery does not equal a strong economy, however, analysts said."Russian equities and the ruble currently remain decoupled from global macro factors and news flow due to capital controls," Alfa Bank said in a note, It estimates that the ruble will be trading at around 80-85 to the dollar in the near future. Economists believe that the worst economic impact of the sanctions is still to come and expect Russia, which has relied heavily on imports of manufacturing equipment and consumer goods, to plunge into a deep recession.Russia's inflation rate reached 16.7% year-on-year in March, the state statistics agency said on Friday, a level not seen since 2015, while food prices have risen even more steeply.Capital Economics pointed out that the 7.6% month on month rise in consumer prices in Russia in March was "the highest monthly increase since the 1990s."Renaissance Capital analysts predict that annual inflation will peak at 24% this summer.Donets said that "the market is destroyed in a sense.""We have a closed financial system now," she added."Where would the ruble rate be if there were no capital controls? It's very hard to say, there has been no precedent."





Unlimited Portal Access + Monthly Magazine - 12 issues-Publication from Jan 2021


Buy Our Merchandise (Peace Series)

 


Contribute US to Start Broadcasting



It's Voluntary! Take care of your Family, Friends and People around You First and later think about us. Its Fine if you dont wish to contribute and if you wish to contribute then think about the Homeless first and Feed them. We can survive with your wishes too :-). You can Buy our Merchandise too which are of the finest quality.


STRIPE


[Russia] - Putin Makes Overtures to North Korea, Vietnam in Bid to Intimidate Ukraine's Allies


[Russia] - Russia Sentences Ukrainian Woman to 12 Years for Balloon Protest


[Russia] - Germany Arrests 3 Men Suspected of Spying on Ukrainian National


[Russia] - St. Petersburg Court Jails Woman 10 Years for Military Office Arson Attack


[Russia] - Ex-Governor Belykh Released From Russian Prison After Serving 8-Year Sentence


South Korea Summons Russian Ambassador Over Pyongyang Defense Pact


Wave of Ukrainian Drone Attacks on Russia Kills 1


[Russia] - U.S. Bans Russia's Kaspersky Antivirus Software


Putin Does Not Rule Out Sending Arms to N.Korea, U.S. ?Incredibly? Concerned


[Russia] - Prison Conditions of Putin Critic Yashin Deteriorating-- Lawyer


[Russia] - As Power of Siberia 2 Pipeline Stagnates, So Do Russia's Hopes for Pivoting Gas Exports Eastward


[Russia] - Moscow Court Extends Detention of Ex-Deputy Defense Minister Ivanov


[Russia] - Ukraine Says 10 Children Returned From Occupied Territories


Severe Storm in Moscow Kills At Least 2


Russian Cyclist Vlasov Turns Down Olympics Spot


[Russia] - EU Targets Russia's LNG Sector in New Sanctions Package


[Russia] - Russia's Sberbank to Offer Corporate Client Services in Occupied Eastern Ukraine


[Russia] - Urals Court Opens Treason Trial Against Dual U.S.-Russian Citizen


[Russia] - Russia Pounds Ukrainian Energy Sites in Latest Attacks


Overnight Ukrainian Drone Attacks on Russia Kill 1, Set Oil Depots Ablaze


[Russia] - Russia and Vietnam Vow to Strengthen Ties as Putin Visits Hanoi


Putin's Ministers Ejected From N. Korean Negotiation Room for Entering Before Kim Jong Un


[Russia] - Russian Forces Intensify Assault on Ukrainian Frontline Town


Russia Accuses France of Risking War in South Caucasus After Armenian Arms Deal


Russia, North Korea Sign Mutual Defense Deal as Kim Pledges Support for Ukraine Invasion


[Russia] - In Photos: North Korea Rolls Out the Red Carpet for Vladimir Putin


[Russia] - Ex-Presidential Hopeful Nadezhdin Resigns as Municipal Deputy


[Russia] - Canada Sanctions 13 Russian Officials Over Navalny's Death


Norway Jails Ex-Wagner Commander for Beating Woman, Attacking Bartender


Moscow Says Awaits U.S. Response to Prisoner Swap Proposals


Russian Court Jails American Soldier for Theft, Death Threats


Putin Hails North Korea?s Support for Ukraine War as He Lands in Pyongyang


Moscow Court Remands Journalist Kriger on ?Extremism? Charges


[Russia] - Mine Blast Kills 2 in Russia's Bryansk Region


Russia Refuses to Release Journalist Alsu Kurmasheva


Branded ?Foreign Agents,? Wives and Mothers of Mobilized Russian Soldiers Face Uncertain Future


[Russia] - Estonia Jails Russian Professor 6 Years for Spying


Leroy Merlin?s Former Russian Business Changes Name


Moscow Police Arrest 3 After Mass Food Poisoning


[Russia] - Putin Hails Pyongyang's Support for Ukraine War Ahead of North Korea Trip


Russia to Hold Naval Drills in Pacific Ocean, Sea of Japan


[Russia] - Ukrainian Drone Attack Sets Oil Tanks Ablaze in Southern Russia


[Russia] - Putin Promotes 'Cousin' in Latest Military Shake-Up


?One Name, One Life, One Plaque?: Russian Project Installs Reminders of Soviet Repressions


Dozens Hospitalized in Moscow Amid Mass Food Poisoning Incident


Kremlin Confirms Putin's Trip to North Korea


[Russia] - Russia's FSB Arrests Ex-Official Accused of Embezzling $22.6 Mln


[Russia] - Humpback Whale Rescued Near Russia's Murmansk Region


U.S. Soldier Held in Russia Denies Threatening to Kill Girlfriend


Kremlin Says Ukraine Peace Summit Produced 'Zero' Results


[Russia] - Russia Issues Arrest Warrant for IStories Head Editor Anin


[Russia] - Putin Appoints Former 'Business Tsar' Titov as Special Representative


U.S. Reporter Gershkovich to Stand Trial in Russia on June 26


Peace Summit Calls for Dialogue With Russia, Backs Ukraine's 'Territorial Integrity'


Russian Journalist Killed in Ukrainian Drone Strike


[Russia] - Russian Prison Standoff Ends With Hostages Freed, Suspects 'Liquidated'





66