Last week the Russian ruble hit a seven-year high against the U.S. dollar and while analysts have downplayed the rise, one economist said people should not “ignore the exchange rate.” American economists have been perplexed about the ruble’s market performance and Russian officials have been quoted as saying that a strong ruble “makes Russian exports more expensive.” Furthermore, U.S. president Joe Biden continues to blame high gas prices on Vladimir Putin.
Vladimir Putin Says the West’s Sanctions Obviously ‘Did Not Succeed’
Since May 2015, the Russian Ruble has performed at its strongest against the U.S. dollars. Many have also stated that Western sanctions had failed. Russian president Vladimir Putin claimed that efforts to discredit the Russian economy were unsuccessful at the St. Petersburg International Economic Forum. “The idea was clear: crush the Russian economy violently,” Putin declared. “They did not succeed. Obviously, that didn’t happen.” Traditionally, when a country is sanctioned broadly by a majority of countries, capital leaves the region and the currency’s overall value against other fiat currencies would decline.
However, Russia is the second-largest exporter of oil and commands the top position as the world’s biggest gas exporter as well. America and Europe (EU) have tried to sanction Russia with great success, yet the EU has to import oil and gas from Russia in not so obvious ways. Fortune India asserts that India may be buying oil from Russia and then selling it to the EU at a profit. The New York Post details that analysts believe the ruble’s strong performance is due to the Kremlin’s capital controls and the fact that oil and gas prices have skyrocketed worldwide. China, India and South Korea also have purchased oil from Russia.
Bloomberg Economics published a study that estimated Putin’s potential profits of $321 billion from just energy exports. Tatiana Orlova, a lead emerging markets economist at Oxford Economics told CBS, however, that Russia’s import markets are crumbling at the seams. “Apart from soaring export revenues, we have a collapse in Russian imports owing to Western sanctions,” Orlova noted during an interview with CBS Money Watch. CNBC’s Max Hess told CNBC that Russia still enjoys record profits. Hess stated:
You see the exchange rate for rubles because Russia is generating record-breaking foreign exchange surpluses. While Russia is selling slightly less right now to the West, it will be increasing as the West cuts off. [reliance on Russia]They are selling tons at record high prices for oil and natural gas. The result is a huge current account surplus.
Service Providers Refuse to Update ATMs in Russia, Biden Says Americans Will Have to Pay High Gas Prices ‘as Long as It Takes’ to Stop Putin’s Ukraine Invasion
The U.S., along with other Western companies are trying to suppress the Russian economy. Just recently, the country’s central bank introduced the new 100-ruble banknote but automated teller machines (ATMs) are having issues with the new bill. NCR and Diebold Nixdorf, two of Russia’s largest ATM service providers, have been forced to leave Russia by sanctions from the West. According to some ATM service providers they are refusing update ATMs, and machines refuse new banknotes. Unnamed sources in the payments industry claim that Russian ATMs do not rank high on their priority list. “Given the geopolitical situation, it is difficult to imagine that development for the Russian market will be a priority,” the source familiar with the matter explained.
Joe Biden, the American president was asked by a NATO summit reporter how long American motorists will be forced to pay higher gas prices. Biden said that it will take “as long as it takes” to stop Putin’s Ukraine invasion. “As long as it takes, so Russia cannot, in fact, defeat Ukraine and move beyond Ukraine,” Biden told the reporter. A Fortune report explains that American citizens “don’t seem to be on board” with Biden’s decisions. The report cites the latest Associated Press-NORC Center for Public Affairs Research poll which shows a lack of confidence in Biden’s leadership.
In terms of handling the U.S. economy, 70% of Americans, including 43% of Democrats, do not approve of Biden’s management. 60% of Americans do not approve of Biden’s leadership, 80% of U.S. citizens think America’s “economic conditions [are] poor,” and 67% of the 80% identified as Democrats. Biden and his administration, however, wholeheartedly believe that Putin is to blame for the world’s rising gas prices. “We could have turned a blind eye to Putin’s barbaric war against Ukraine and the price of gas wouldn’t have spiked the way it has, but America rose to the moment,” Biden saidPublished June 27, 2007.
What do you think about the strength of the Russian ruble and Biden saying that Americans must put up with high gas prices because of Putin’s war? Please comment below to let us know your thoughts on this topic.
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