TASS — Dollar drops below 60 to the ruble on Moscow Exchange, lowest since July 31, 2015

The Russian currency is strengthening on higher oil prices.

TASS

Dollar drops below 60 to the ruble on Moscow Exchange, lowest since July 31, 2015

Mike Norman — Traders Were Wrong to Sell the Russian Currency

Most people are not familiar with MMT (Modern Monetary Theory) and even those who have heard of it or who claim to understand it tend to dismiss it as some kind of fringe economics.

However, MMT is not at all some kind of fringe economics. MMT concisely describes the functioning of our monetary system, a system that for the past 45 years has been pretty much based on free-floating exchange rates, where countries issue their own, non-convertible currency. When I say non-convertible I mean not convertible at some fixed rate for gold or some other currency.

I'm an economist by education, but I was taught all the wrong stuff in college. I started getting into MMT 14 years ago, and since then I have been a proponent and teacher of it.

My understanding of MMT has allowed me to avoid the forecasting pitfalls that we saw from most mainstream economists. They were all stuck in the gold standard or things like loanable funds theory, and still are. That's why they wrongly saw the dollar crashing and inflation and interest rates skyrocketing when the Fed started to engage in all of its extraordinary measures during the Great Financial Crash.

In addition, they have been avowed deficit "hawks" (which has been hurting economies everywhere) and predicting debt crises in Japan, credit bubbles in China and "stimulus" that never seems to come from the negative interest rates in Europe.

I was never on board with any of those things. In fact I was the opposite; not just to be different, but because I knew what the effects of those policies would be under our current monetary regime. It was not guesswork for me; it was simply a level of understanding.

If you want an example of MMT in action, I will give you one right now. Look no further than the action taken by the Russian central bank last week.….

The Street — Real Money
Traders Were Wrong to Sell the Russian Currency

Mike Norman

RT — Ruble at 2-wk low against US Dollar, as Central Bank interferes

The Russian ruble fell for a third consecutive day, extending losses from Monday when the Central Bank announced it would raise the rate for foreign-currency loans to banks. The Bank is trying to curb the 15 percent the currency has gained this year.

On Monday, the Bank of Russia said it will increase the one-year foreign currency repurchase agreement (repo) to the London Interbank Offered Rate (Libor) plus 2.5 percent. Before the hike, the bank’s repo rate was 1.75 percent plus Libor.

The ruble lost 1.3 percent at the opening Tuesday, trading at 54.03 to the dollar at 11:55am in Moscow, a near 10 percent drop from where the ruble traded at on Thursday at 48.84; the first time it broke the 50 threshold since November.

Against the euro, the ruble lost 0.8 percent at 11:35am Moscow time at 57.69. The currency began to lose momentum Friday, when it nosedived 5 percent.

Despite the drastic loss in the last few days, the ruble is still up 12 percent since the beginning of the year, when it opened at 58.84 per dollar.

Lower oil prices also pushed the ruble to weaker trading levels, with Brent trading down 1 percent at $63.1 per barrel at the time of publication.
The ruble may lose more of its value leading up to the Central Bank meeting on April 30, when it is expected to cut the ruble lending rate.

Someone tell their translator that it hould be "intervenes" instead of "interferes."

RT
Ruble at 2-wk low against US Dollar, as Central Bank interferes

Sputnik — Enter the Dragon and the Bear: US Faces Its Ultimate Nightmare – Eric Kraus

By simultaneously attacking Russia and seeking to contain China, the United States has driven an alliance between the two – which should be Washington's ultimate nightmare, Eric Kraus, an expert on Asian and Russian investments, told Sputnik.

Eric Kraus is "a prominent expert in Russian, Asian and Latin American financial markets and Director at Principal Asset Management advisory company." His analysis in this post is chiefly economic and financial.

Sputnik
Enter the Dragon and the Bear: US Faces Its Ultimate Nightmare – Eric Kraus

RT — Ruble passes 50 against USD for 1st time since November

Ruble on a tear and still rising against the dollar as I write this. USD/RUB = 49.70

RT
Ruble passes 50 against USD for 1st time since November

Also

Brazil Business Today

Russia, Brazil Best Emerging Bond Markets - HSBC Specialist

Constantin Gurdgiev — From Worst to Best: Reasons for Ruble's Miracle Recovery

In other words, we have many, many moving parts to one equation. One can't tell the dominant one, or which are likely to last longer, but my sense is that majority of these forces are temporary and the long-run link between Ruble and oil price will be regained. 

Now, assuming oil price dynamics remain where they are today (weak upside), Ruble is likely to devalue again, back to USD/RUB 55-57 range. If inflation does not fall toward 10% in Q2 2015 (and I do not think it will), we are likely to see Ruble move into USD/RUB 60-65 range over this quarter. On the other hand, improved outlook for the economy (signalling, say annual contraction closer to 3.5-4 percent) can see Ruble staying within the USD/RUB 50-53 range.

True Economics

From Worst to Best: Reasons for Ruble's Miracle Recovery

Constantin Gurdgiev

Ben Aris — Russian ruble seen appreciating by third this year

After crashing in December, Russia’s ruble has made a remarkable comeback since February by rising about 15% against the dollar, making it the best performing currency amongst the 14 in Emerging Europe so far this year, according to Bloomberg. And the appreciation of the ruble is not over, argues Alfa Bank chief economist Natalia Orlova; the ruble could appreciate by as much as a third over the rest of this year if things go well.

You don’t need a PhD in economics to see that the ruble was oversold during its collapse from the mid-50s in November to a low of RUB80 to the dollar in the depths of the panic in December. But it bounced back into the 70s and then 60s very fast.

“Based on this metric the ruble fair value came out at RUB56/$ by the end of 2014, with this indicator providing correct signal of the ruble depreciation. However, and similar to previous benchmarks, it has underestimated the scale of the ruble’s slump, [and] did not justify a drop to RUB80/$ that was seen in December,” said Alfa Bank’s Orlova in a report entitled, “Ruble 2015: Appreciation Is In The Air”, which was released at the end of February, referring to one of several methods she used to estimate the fair value of the ruble.

In general, Orlova concludes that the ruble was overvalued by about 20% in line with other emerging market peers, but the 40% fall in its value was exceptional. Accepting that the ruble was oversold, the difficult part is working out exactly where the “fair value” of the ruble should be now, once investors switch back from judging the situation using their spleens to using their heads.

Johnson's Russia List
Russian ruble seen appreciating by third this year
Business New Europe – bne.eu – Ben Aris in Moscow – March 9, 2015