If oil prices fall to $25 per barrel, the budget could be reduced without a deficit if the dollar is equal to 210 rubles, estimates economists of Bank of America.USD/RUB is now ~80. The ruble has taken a hit over the last few days with oil falling below $30.
If oil prices fall to $25 per barrel, for a balanced fulfillment of the Russian budget for 2016, the dollar should cost 210 rubles. For the implementation of the budget with a deficit of 3%, something the President of Russia Vladimir Putin in December called the maximum, the dollar should cost 140 rubles, estimates economists of the Bank of America Merrill Lynch.…
Fort Russ
Bank of America Calculates $210 Ruble Scenario
Translated by Ollie Richardson for Fort Russ
RBC
RBC
I think it is probably a non-linear relationship Tom...
ReplyDeleteiow as oil falls, it becomes less meaningful to the terms of trade going forward... as other commodities that the price might not have changed in USD or RUB terms are more influential going forward.... its like "trade weighted"... so as oil has already taken the big hit, the other things become more meaningful in the denominator of the equation...
Brian R made the point the other day that more than just oil is traded between US and Canada so I assume more goes on between the US and Russia than oil... at $100+ oil was dominating the terms but now that has changed...
Think of osmotic pressure: If you have a solution across a reg. membrane where the concentrations of both sodium and potassium are about equal and in equilibrium, say you increase the sodium 10x and then the pressure will change to the new equilibrium state... THEN you double the potassium and not much will happen as the big change was already dominated by what happened when the sodium went 10x...
Hey Tom this whole oil dynamics that is going on is empirical evidence of your table pounding on the economic rent stuff.... ie no productive contribution... that is being eliminated BIG LEAGUE with the oil collapse and taking out YUGE amounts of monopoly rents... things are going to get better imo as productive contribution is now going to increase across the board...
All the same resources are available as when the price of oil was higher. That those resources need to be idled because prices have changed is simply superstition that has nothing to do with reality. It's just dumb.
ReplyDeleteWhat's interesting is that the rents generally paid for imports - where they were spent at all and not used as casino chips.
ReplyDeleteThat those imports aren't happening which means the exports aren't happening which means that goods/serivces for export are not being made.
There is some shift back - since domestic consumers and other oil users have more money. But where is the evidence that they are 'spending more' - particularly as export-led growth collapses and the reports of job losses mount (steel workers laid off, etc).