The ruble’s recent performance as the top-performing currency is a complex issue, defying simple explanations. While it’s true that the ruble has experienced a significant percentage increase, this doesn’t necessarily reflect a robust Russian economy. In fact, the ruble’s value remains relatively low compared to historical highs and other major currencies. The significant increase is more accurately interpreted as a percentage-based gain from a previously depressed state; a smaller numerical increase from a higher starting point would not register as significantly. This gain isn’t necessarily indicative of economic strength within Russia itself.
The current situation highlights the importance of considering the baseline.… Continue reading
Russia’s inflation has surged to a near-year high of 9.7%, exceeding 2022’s rate, primarily due to war spending and soaring food prices. In response, the Central Bank drastically increased its key interest rate to 21%, the highest since the 2000s, a move criticized by some as potentially crippling businesses. This aggressive measure aims to combat inflation fueled by substantial increases in essential goods like potatoes and onions. The Central Bank will review the interest rate at its next meeting, weighing inflation control against economic stability.
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China’s yuan replaces the US dollar as the primary currency for Russia’s foreign trade. This development comes as no surprise, considering that Russia has been increasingly sanctioned out of the eurodollar market. The yuan’s share in Russia’s exports has risen dramatically over the past two years, from 0.4% to 34.5%, and its share in imports has also increased significantly, from 4.3% to 36.4%. Settlements in Russian roubles and yuan in bilateral trade have reached as high as 95%.
It is worth noting that both the yuan and the ruble are protected currencies whose official exchange rates do not reflect their true value in the free market.… Continue reading
Matt Underwood 
John Q. Hosedrinker