October 8, 2014

ALL YOU REALLY HAVE TO KNOW ABOUT THE IMBALANCE OF POWER IN THIS RELATIONSHIP...:

Here's Who's Getting Hammered By Russia's Falling Ruble (Carol Matlack  October 07, 2014, Businessweek)

President Vladimir Putin may control the levers of power in Russia, but there's one thing he hasn't been able to control: the relentless slide of the ruble.

The currency is down about 20 percent against the dollar since January and is now at its lowest level since Russia's 1998 debt default. Its performance this year is the worst of any major currency except Argentina's peso.

It could fall farther, despite interventions by Russia's central bank, which over the past few days has spent $1.75 billion to prop it up. The ruble remains under "permanent pressure" as investors flee the country and sanctions choke off access to foreign capital markets, Vladimir Evstifeev of Moscow's Bank Zenit tells Bloomberg News.

The central bank runs the risk of depleting its reserves if it keeps spending to prop up the ruble. That's why many analysts are betting its next move will be to hike interest rates as early as this month, pushing its key lending rate to 8.5 percent. That would put the brakes on economic growth that's already sputtering.

In the meantime, the falling ruble claims more and more victims. They include:

• Russian consumers. As the currency sinks, inflation has risento 8 percent, including an 11.4 percent year-on-year rise in food prices during September, according to the state statistics service. Sales of imported consumer goods such as laptop computers have collapsed, and Russians are holding off on buying cars and other big-ticket items.

...is that we couldn't inflate our own currency but can theirs. They just aren't a serious state.

Posted by at October 8, 2014 5:41 PM
  

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