Recent news reports have detailed that Russia’s fiat currency, the ruble, was the best-performing currency worldwide and the articles explained that American economists were perplexed by the trend. Monday’s Russian ruble surged to 55.77% per dollar. It was the largest increase in value since 2015. While many have dismissed the ruble’s exchange rate, Charles Lichfield, the Atlantic Council’s Geoeconomics Center deputy director, published an editorial called: “Don’t ignore the exchange rate: How a strong ruble can shield Russia.”
Russia’s Ruble Climbs Higher — Report Says ‘Putin Is Having the Last Laugh’
According to Western media reports, Russia’s financial sanctions are not as severe as they have been in recent months. The Russian ruble reached a record high of 1.26% against the U.S. Dollar on Monday. This was its highest level since 2015. There have been many reports from economists and analysts that have said Russia’s financial books are cooked and most of the ruble’s strength is simply smoke and mirrors. According to one Youtuber, the ruble is strong but the majority of its strength can be bolstered through manipulation.
Youtuber Jake Broe told his 146,000 subscribers that the “Russian economy is currently tanking, inflation is high, unemployment is going up, wages are going down, the GDP of the Russian economy is collapsing.” However, Broe’s arguments could also be said about the United States as the American economy seems to be heading toward a recession, inflation is the highest in 40 years, jobless claims in the U.S. have risen as productivity is down, and the U.S. economy’s GDP shrank significantly in Q1 2022.
Broe claims that Russia’s central bank and government are manipulating the market, making the ruble appear strong. But, it is possible that U.S. politicians as well as the Federal Reserve can be accused of manipulating information and spreading unverifiable information. Other reports that do not leverage Broe’s biased talking points indicate that sanctions against Russia have failed miserably. A report published by armstrongeconomics.com says the Russian oil boycott is not working and “Putin is having the last laugh as he is now selling more oil at a higher price point.”
Armstrongeconomics.com author Martin Armstrong added:
Russian oil exports grew by 620,000 B/D to reach 8.1 Million B/D in April. India (+730,000) and Turkey (++180,000) contributed to the offset of the international embargo. The EU, despite sharply decreasing shipments, remained the most important importer. The IEA reported that Russian oil exports rose over 50% YoY during the first four months of the year — The boycott has completely backfired on the West and has helped strengthen the Russian economy.
Report Shows India Buys Oil From Russia, Refines It, Then Sells It to Europe for Profit — European Union Commission President Predicts Oil Sanctions Could Backfire
Russia’s financial transactions have been kept secret as it announced that the monthly spending figures of its government would not be revealed. Russia’s Finance Ministry told the press the country needed to “minimize the risk of the imposition of additional sanctions.” Bitcoin.com News reported two weeks ago that numerous countries are not adhering to the West’s sanctions and have been purchasing oil from the Russian Federation. India, for example, is said to be buying oil from Russia, and then selling the refined oil to Europe at a profit.
New Delhi: India is importing crude oil from Russia & re-exporting it at much higher prices to US, France, Italy & UK. – CREA report shows.
— South Asia Index (@SouthAsiaIndex) June 14, 2022
China is also buying oil from Russia and many other oil refining companies are obliged to do so. For instance, Italy’s largest refinery ISAB has been forced to source crude oil from Russia because banks stopped providing the company with credit. China is currently the single largest buyer of Russian oil, having been so since 2021. According to data, the Chinese get an average of 1.6million barrels per day in Russia. As oil becomes scarcer across Europe, warnings suggest that Britain may face severe grid blackouts. The financial newspaper the Economist insists Europe is suffering through “a severe energy-price shock”
This is the inconvenient truth many who refer to Russia’s GDP do not grasp.
If we subtract Russian energy from the mix of global energy supplies, global oil & gas prices will quickly spike to levels that collapse the entire global economy, & USD-centric debt markets & financial system. pic.twitter.com/dZiEaZXh3H
— Luke Gromen (@LukeGromen) February 21, 2022
Moreover, two weeks ago, Charles Lichfield, the Atlantic Council’s Geoeconomics Center deputy director, published an editorial that says people should not dismiss the ruble exchange rate. Lichfield’s article says Western governments claimed that eventually, Russia’s economy would ultimately fail but he thinks things need to be reassessed. “The Russian financial system may have withstood the initial shock — but a fall in gross domestic product (GDP) and crippling input shortages, they claimed, would force Moscow to eventually de-escalate as the war entered a grinding phase — But it’s time to reassess this stance,” Lichfield wrote.
Their “war” will cause Russia’s economic collapse. They will not be in a bargaining position soon…. You can just kick their diplomats out. https://t.co/Yx2Bn4ACaa
— J Burgess – I am what I am. (@Gooddem4ever) April 5, 2022
According to government officials, the sanctions on energy could prove counterproductive and not always work. Ursula Von Der Leyen was the European Union Commission President and described the potential consequences of energy sanctions in an interview. Von Der Leyen said that if countries “immediately” sanctioned Russian oil imports, Vladimir Putin “would be able to take the oil that he does not sell to the European Union to the world market, where the prices will increase, and [he will] sell it for more.”
What do you think about the Russian ruble’s market performance and the theories on why it is doing so well? Do you think the Russian ruble is being propped up by the country’s officials or do you think the fiat currency is strong? Comment below to let us know your thoughts on this topic.
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