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Turkey Joins Russia’s Ruble-Based Alternative To SWIFT

After repeated warnings over the past couple of years, Turkey and Russia have signed a pact to increase use of the ruble and lira in cross-border payments, with Turkey signing on to Russia’s alternative to SWIFT, the international telecommunications protocol used by banks and central banks the world over. 

Though SWIFT is an international cooperative owned by its members, with more than 10,000 banks worldwide relying on its system for handling sizable inter-bank transactions, the safety of the network was brought into question after a series of cyberattacks in 2015 and 2016 resulted in the theft of $101 million from the Central Bank of Bangladesh. 

For the first time since SWIFT’s laucnh, the hacks stoked doubts about the system’s safety, and prompted many US rivals, including Russia, to ramp up work on their alternatives to SWIFT.

Erdogan and Putin

In addition to Turkey, China and Russia have signed agreements to bolster trade between the two countries, including settling a larger percentage of their bilateral trade in rubles and renminbi. For China, bilateral trade with Russia grew from $69.6 billion in 2016 to $107.1 billion last year. China is Russia’s biggest partner for imports and exports. 

There has also been talk about India joining Russia’s SWIFT alternative as Washington continues to threaten New Delhi with sanctions over its decision to purchase Russian-made missile-defense systems.

According to ReutersRussian Finance Minister Anton Siluanov signed the agreement with Ankara on Tuesday. The agreement, signed on Oct. 4, will encourage the two countries to start using Russia’s system in mutual settlements.

 …click on the above link to read the rest of the article…

The Dying Days Of An Empire

The Dying Days Of An Empire

Caravaggio Conversion on the way to Damascus 1600-01

Something’s been nagging me for the past few days, and I’m not sure I’ve figured out why yet. It started when Donald Trump first called off the alleged planned strikes on targets in Iran because they would have cost 150 lives, and then the next day said the US would do sanctions instead. As they did on Monday, even directly targeting Trump’s equal, the “Supreme Leader Khameini”.

When Trump announced the sanctions, I thought: wait a minute, by presenting this the way you did, you effectively turned economic sanctions into a military tool: we chose not to do bombs but sanctions. Sounds the same as not doing a naval invasion but going for air attacks instead. The kind of decisions that were made in Vietnam a thousand times.

However, Vietnam was all out war (well, invasion is a better term). Which shamed the US, killed and maimed the sweet Lord only knows how many promising young Americans as well as millions of Vietnamese, and ended in humiliating defeat. But the US is not in an all out war in Iran, at least not yet. And if they would ever try to be, the outcome would be Vietnam squared.

Still, that’s not really my point here. It’s simply about the use of having the world reserve currency as a military weapon instead of an economic one. And I think that is highly significant. As well as an enormous threat to the US. The issue at hand is overreach.

While you could still argue that economic sanctions on North Korea, Venezuela and Russia are just that, economic and/or political ones, the way Trump phrased it, comparing sanctions one on one with military strikes, no longer leaves that opening when it comes to Iran.

 …click on the above link to read the rest of the article…

Maduro Visits Putin, Proposes Global Oil Trade In Rubles, Yuan

Maduro Visits Putin, Proposes Global Oil Trade In Rubles, Yuan

Three weeks after the US imposed financial sanctions on Venezuela in an effort to cripple its economy and choke the Maduro regime, which in turn prompted Caracas to announce it would no longer receive or send payments in dollars, and that those who wished to trade Venezuelan crude would have to do so in Chinese Yuan, today during an energy summit held in Moscow, Venezuela’s president Nicolas Maduro proposed to expand his own personal blockade of the US, by proposing that all oil producing countries discuss creating a currency basket for trading crude and refined products. One which is no longer reliant on the (petro)dollar.

“Developing a new mechanism of controlling the oil market is necessary,” Maduro said on Wednesday at the Russian Energy Forum, being held in Moscow this week.

Quoted by RT, Maduro also blamed trade in crude oil paper futures as having an adverse impact on the oil market, which has undermined attempts by OPEC to stabilize prices. To counteract such “speculation”, Maduro proposed an alternative currency basket, one which is based not on the world’s reserve currency but includes the yuan, ruble, and other currencies, and which will mitigate the alleged adverse impact of futures trading.

 

Maduro’s proposal is merely the latest not so veiled hint at dedolarizing the global financial system by bypassing the petrodollar entirely, and rearranging a new currency basket determined by the world’s biggest oil producer, and largest oil importer.

Of course, Maduro is merely piggybacking on what China may already have in the works: recall that a month ago, the Nikkei Asian Review reported that China is preparing to launch a crude oil futures contract denominated in Chinese yuan and convertible into gold, potentially creating the most important Asian oil benchmark and allowing oil exporters to bypass U.S.-dollar denominated benchmarks by trading in yuan.

…click on the above link to read the rest of the article…

Glistening Gold & The Rumble In The Ruble – America’s “Tribute Scam” Is Unraveling Fast

Glistening Gold & The Rumble In The Ruble – America’s “Tribute Scam” Is Unraveling Fast

Before we discuss The Empire of Chaos ongoing attacks on “The Assassin Putin” and The Master of the Universe attempts to topple any challenge to Washington’s global hegemony, we thought the following chart may give some much needed context for where the pain really is – the drop in the oil price in local currency terms has been the least of all major nations… for Russia

While a case can be made that for Moscow it would be a tremendous waste of hard-earned foreign exchange to try to counter a rig against their currency they simply cannot beat, as the entire fiat financial power of the US is against them.

As Pepe Escobar via DoomsteadDiner.net notes,  Russia’s Central Bank by now should be all-out selling rubles for gold, and building Russia’s gold reserves.

Well, it is happening, somewhat.

Last week, Russia’s Central Bank estimated gold reserves to have reached 1,415 metric tons in 2015 – over 17 percent more than 2014, valued at almost $48.6 billion. The share of monetary gold in Russia’s foreign currency reserves rose from 11.96 percent to 13.18 percent.

That’s still not good enough. Why? A harsh answer would be that the Russian Central Bank and the Ministry of Finance, as some analysts argue, are in effect run by saboteurs and vassals of the US financial elite, a.k.a. the Masters of the Universe.

Still, the Russian Central Bank did not intervene to prop up the ruble. And they should not. The best course of action would be to let the ruble go, ending almost all imports, thus forcing self-sufficiency. Or introduce capital controls, with only approved transactions involving foreign currencies. It did work for Malaysia, for instance, after the 1997 Asian financial crisis.

Forget about a China crash

…click on the above link to read the rest of the article…

Bank Of Russia Calls “Emergency” Meeting To Address Ruble Rout

Bank Of Russia Calls “Emergency” Meeting To Address Ruble Rout

The sharp (and seemingly inexorable) decline in crude prices combined with Western economic sanctions and geopolitical turmoil have weighed on the currency of late and in the midst of a new leg down in oil, investors appear to be panic selling.

Some investors are selling at any price,” Bernd Berg, an emerging-markets strategist in London at Societe Generale told Bloomberg by e-mail.

And even as Russian central bank Deputy Chairman Vasily Pozdyshev swears “there’s no systemic risk,” the Bank of Russia has now called an emergency meeting with state-run and private lenders to discuss the FX bloodbath.

  • BANK OF RUSSIA TO MEET STATE-RUN, PRIVATE LENDERS: IZVESTIA

‘s Central Bank call emergency meeting as plunges for second day running, breaking 1998 lows https://twitter.com/rianru/status/690214963403685888 

Ruble Plunges 26% in 90 days, 6% in Two Days, Hits New Low, Government Says to Heck with it

Ruble Plunges 26% in 90 days, 6% in Two Days, Hits New Low, Government Says to Heck with it

Where’s the shock and awe?

The ruble plunged 3.8% on Wednesday and another 2.8 on Thursday to a new all-time low of 83.85 to the dollar, at 5:30 PM Moscow time, blowing through the previous catastrophic panic low of December 2014. At the time, the Ministry of Finance and the Central Bank deployed desperate, and ultimately very costly shock-and-awe measures to stop the ruble from spiraling out of control. And it triggered all kinds of drama.

On December 16, 2014, the Central Bank announced that it increased its benchmark rate by a brutal 6.5 percentage points to a dizzying 17%, after having already jacked up rates in the prior week to 10.5%. And the Ministry of Finance announced it would begin selling Russia’s crown jewels, its dwindling foreign currency reserves, and with the proceeds mop up rubles.

It seemed to put a floor under the ruble for a few blinks of an eye, but then the ruble crashed 20% in no time, hitting 80 rubles to the dollar for a few moments, and it was going to be the end of the world, but then the ruble reversed course and spiked higher.

Today, there’s no such drama. The ruble is now lower than it had ever been. It has plunged 26% against the dollar in just three months. It’s also down 25% against the euro, 27% against the yen, and 23% against the yuan. This is an all-out ruble crash, not a “strong dollar” problem.

And it’s down 63% against the dollar since early 2013. Back then, it took 29 rubles to buy a dollar. It took 62 rubles three months ago. It takes nearly 84 rubles now:

Russia-ruble-usd-Oct-2015-Jan-21-2016

But there were no big announcements and no shock-and-awe moments. Instead, the Ministry of Finance and the Central Bank sat on their hands and let it happen.

…click on the above link to read the rest of the article…

S&P Cuts Russia To Junk, Ruble Plunges To 6-Week Lows – Full Text

S&P Cuts Russia To Junk, Ruble Plunges To 6-Week Lows – Full Text

With the Ruble having plunged 3 handles today alone, it appears perhaps more than a few could see this coming…

  • RUSSIAN FEDERATION RATINGS CUT TO JUNK BY S&P
  • RUSSIAN FEDERATION CUT TO BB+ FROM BBB- BY S&P; OUTLOOK NEG

Putting it below investment grade for the first time in a decade. Of course, this happens just 6 days after the news first leaked that S&P would pay a $1.5 billion settlement to the US DoJ over downgrading America: one wonders just what else was in the small print?

The downgrade comes on a day when The Russia Agriculcural Bank failed to sell 10Y bonds into the market. Russian stocks (ADRs) and the Ruble continue to slide on this news.

 

 

Here are a few countries that are now rated higher than Russia…

…click on the above link to read the rest of the article…

 

Russia Abandons PetroDollar By Opening Reserve Fund

Russia Abandons PetroDollar By Opening Reserve Fund

2015 has not been good to Russia; the spread between Brent and WTI is gone in anticipation of US exports and both benchmarks have flirted with sub $45 prices. A hostage to such prices, the ruble has yet to begin its turnaround and the state’s finances are in extreme disarray. President Vladimir Putin’s approval ratings remain sky-high, but his country has not faced such difficult times since he took office more than 15 years ago.

Since the turn of the new year the ruble has fallen over 13 percent and Russia’s central bank and finance department are running out of options – to date, policy makers have hiked interest rates to their highest level since the 1998 Russian financial crisis and embarked on a 1 trillion-ruble ($15 billion) bank recapitalization plan to little effect. Their latest, and most dramatic, plan is to abandon the dollar – at least somewhat.

Related: Putin: Battered, Bruised But Not Broken

In late December, the Kremlin ordered five large state-owned exporters – including oil and gas giants Rosneft and Gazprom – to sell their foreign currency reserves. Specifically, the companies must bring their foreign reserves to October levels by the beginning of March. To comply, the exporters may have to sell a combined $1 billion per day until March. Private companies have not yet been hit by these soft capital controls, but have instead been advised to manage their foreign exchange maneuvers responsibly.

 

…click on the above link to read the rest of the article…

Peculiarities of Russian National Character

Peculiarities of Russian National Character

Recent events, such as the overthrow of the government in Ukraine, the secession of Crimea and its decision to join the Russian Federation, the subsequent military campaign against civilians in Eastern Ukraine, western sanctions against Russia, and, most recently, the attack on the ruble, have caused a certain phase transition to occur within Russian society, which, I believe, is very poorly, if at all, understood in the west. This lack of understanding puts Europe at a significant disadvantage in being able to negotiate an end to this crisis.


Whereas prior to these events the Russians were rather content to consider themselves “just another European country,” they have now remembered that they are a distinct civilization, with different civilizational roots (Byzantium rather than Rome)—one that has been subject to concerted western efforts to destroy it once or twice a century, be it by Sweden, Poland, France, Germany, or some combination of the above. This has conditioned the Russian character in a specific set of ways which, if not adequately understood, is likely to lead to disaster for Europe and the world.

Lest you think that Byzantium is some minor cultural influence on Russia, it is, in fact, rather key. Byzantine cultural influences, which came along with Orthodox Christianity, first through Crimea (the birthplace of Christianity in Russia), then through the Russian capital Kiev (the same Kiev that is now the capital of Ukraine), allowed Russia to leapfrog across a millennium or so of cultural development. Such influences include the opaque and ponderously bureaucratic nature of Russian governance, which the westerners, who love transparency (if only in others) find so unnerving, along with many other things. Russians sometimes like to call Moscow the Third Rome—third after Rome itself and Constantinople—and this is not an entirely empty claim. But this is not to say that Russian civilization is derivative; yes, it has managed to absorb the entire classical heritage, viewed through a distinctly eastern lens, but its vast northern environment has transformed that heritage into something radically different.

…click on the above link to read the rest of the article…

Russian Default Risk Surges To New 6-Year Highs As Ruble Rubble Returns

Russian Default Risk Surges To New 6-Year Highs As Ruble Rubble Returns

Just when you thought it was all over… Having bounced post-CBR intervention and somewhat stabilized, the re-collapse in crude oil prices and continued weakness in Russian macro data provided just the impetus for a re-plunge in the Ruble (back above 63.5/USD) and surge in Russian bond yields (back to 14%). While Russian stocks are also retesting towards recent lows, it is Russian CDS that is the most telling as it closed to day at 595bps – the widest since March 2009. While these violent gyrations are new for recent history, they are not a new phenomenon, but are quite characteristic of the country’s financial history.

The Ruble and stocks are not quite back to recent lows…

But Russian credit risk has hit new highs…

However, as RT explains, this is nothing new for Russia…

The dramatic fall of the Russian ruble made headlines in December. The violent gyrations in the ruble are not a new phenomenon, but are quite characteristic of the country’s financial history.

…click on the above link to read the rest of the article…

 

Low Oil Prices And Money Worries For 2015

Low Oil Prices And Money Worries For 2015.

In response to the Ruble’s recent fall (over 50% against the U.S. Dollar), Swiss banks have begun taking extreme and extraordinary measures in what appear to be early signs of a currency war. There is now a negative interest rate of 0.25% on deposits made in Swiss Francs. In combination with pre-existing efforts such as Zero Interest Rate policies and quantative easing, we are now entering an era of Negative Interest Rate Policies. These kinds of policy decisions will do nothing to allay fears about economic slowdown in Europe and Asia and the looming threat of another financial crisis. Worries aboutdebt-bubbles propping up the US shale scene seem to already be influencing international banking policy, with strategies now revolving around insulating any potential risks should it all turn sour in 2015 for key global currencies.

In addition to the Ruble’s near 50% decline against the dollar, the Japanese Yen is down 20% against the U.S. Dollar since the summer. This comes as welcome news for struggling Japanese industry as it improves export prices against import prices in favor of Japanese workers. As part of the Abenomics strategy unveiled over two years ago by the Japanese Prime Minister Shinzo Abe, by flooding the market with Yen he hopes to reinvigorate domestic industry. Given his re-election this December, his policy seems to be popular if somewhat unsuccessful thus far. Off the back of this election victory, the pro-nuclear Liberal Democratic party has greenlit the re-opening of two nuclear reactors in the Takahama project, bringing the current approved number to four with a final total of nine expected to come online in total in 2015. The restarting of these reactors could prove crucial as Japan struggles with expensive, dollar-linked imports of commodities such as LNG and crude oil. It will likely have a positive impact onlanguishing uranium markets should the go-ahead be given for all nine but only time will tell.

…click on the above link to read the rest of the article…

Slumping Russian ruble threatens German economy – top exec — RT News

Slumping Russian ruble threatens German economy – top exec — RT News.

German companies doing business with Russia are suffering from the weak ruble, as one in three companies will have to fire employees or cancel its projects, the managing director of the Association of German Chambers of Industry and Commerce warned.

“The crisis of the Russian economy leaves behind an even deeper brake track in Russia-based ventures of German businessmen,” Volker Treier said in an interview with Bild am Sonntag newspaper.

The managing director of International Economic Affairs at the Association of German Chambers of Industry and Commerce (DIHK) revealed that “one in eight companies is considering withdrawing from Russia. So the breach in so many business relations is imminent.”

According to Treier, the weak Russian currency is hurting German businesses. Ten percent of German companies have said that their long-term Russian partners are turning away from Europe toward Asian markets.

…click on the above link to read the rest of the article…

China proposes broadening use of Yuan for trade with Russia: report | Reuters

China proposes broadening use of Yuan for trade with Russia: report | Reuters.

(Reuters) – China’s trade minister proposed more use of China’s currency in settling trade with Russia in the face of a falling rouble to ensure safe and reliable trade, Hong Kong broadcaster Phoenix TV reported on Saturday.

The rouble has fallen about 45 percent against the dollar this year, and suffered particularly steep falls early last week. President Vladimir Putin has declined to call it a crisis and said it would eventually rise again.

Chinese Minister of Commerce Gao Hucheng said the use of China’s yuan, or renminbi, has been increasing for several years but western sanctions on Russia had made the trend more prominent, Phoenix TV said on its website news.ifeng.com.

Gao said China and Russia were capable of achieving this year’s trade target of $100 billion. Last year, trade between the two gained 1.1 percent at $89.2 billion, according to Chinese customs figures.

…click on the above link to read the rest of the article…

Rouble collapse will be felt globally – Al Jazeera Blogs

Rouble collapse will be felt globally – Al Jazeera Blogs.

The Central Bank, trying as it was to catch a falling knife, had very little choice but to ramp up interest rates on Tuesday.

It’s attempt to stop the Rouble’s rapid descent, however, failed miserably. The currency has lost more than 50 percent of its value, which will lead to a crippling rise in the cost of imports.

Western sanctions have made their point: President Vladimir Putin will not get away with his annexation of Crimea and his meddling in Ukraine.

It is a heavy penalty for the Russian people. Many have taken out mortgages in dollars, meaning their repayments doubled in the last 10 months.

Gas giant Gazprom slipped out a statement on Tuesday saying it would fire up to 25 percent of its workforce – Gazprom employs in excess of 500,000 people.

But the West could also pay a heavy price.

…click on the above link to read the rest of the article…

More To Ruble’s Collapse Than Meets The Eye

More To Ruble’s Collapse Than Meets The Eye.

The ruble is dying, and fast. In what is now being dubbed ‘Black Monday’ the ruble’s value to the dollar dropped nearly 15 percent. Tuesday brought no respite and the ruble fell another 10 percent. The ruble’s collapse follows a similar – though by no means as extreme – slump in oil prices. Still, the Russian economy’s troubles are deeper than that and President Vladimir Putin will be hard-pressed to find an easy out. With a recession looming, state energy companies are struggling to stay afloat, if not directly contributing to the country’s woes.

On the year, the ruble has lost more than 55 percent of its value against the dollar, breaking psychological barrier after psychological barrier. Tuesday’s low of 80 marks a new record and harkens back to the period of hyperinflation that characterized post-Soviet Russia. Then, as now, citizens are seeing their material wealth disintegrate amid rising costs domestically.

Related: Sanctions, Oil Prices Push Russia Into Currency Crisis

Ruble vs Dollar

Source: QZ

…click on the above link to read the rest of the article…

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