Fiat Currency Zero Hour!

[Wiz]

Fiat Currency Zero Hour

Russia And China Might Collectively Challenge the Dollar's Reserve Status!
Blistering economic sanctions that threaten to ruin the ruble may leave Putin with little choice but to ally himself further with China and challenge the dollar head-on.  writes, Quoth the Raven, Liberty. Finance. Bullshit. 5 hr ago

In the same breath that Putin made this announcement, he continued to push back on economic sanctions being levied against Russia:

"As you can see, not only do Western countries take unfriendly measures against our country in the economic dimension - I mean the illegal sanctions that everyone knows about very well.”

This may be because the bigger story over the weekend was the beginning of removing Russia from the SWIFT intra-bank messaging system, along with sanctions targeting Russia’s Central Bank.

SWIFT helps provide services related to the execution of financial transactions and payments between banks worldwide. Central Bank sanctions from the EU and the Fed instantly make Russia - and its currency, the ruble - pariahs elsewhere in the world.

Russia’s Central Bank reserves are generally controlled by foreign central banks. If those foreign banks decide to freeze access to such reserves, Russia only has its tangible assets (such as oil, and gold reserves) to fall back on.

The ruble is expected to collapse as a result of these sanctions.

Said one analyst on Twitter over the weekend, the Kremlin “has no good off-ramps at this point”.

Read the whole article here: Fiat Currency Zero Hour!

 

[2tallbill]

Fiat Currency Zero Hour

This may be because the bigger story over the weekend was the beginning of removing Russia from the SWIFT intra-bank messaging system, along with sanctions targeting Russia’s Central Bank.

SWIFT helps provide services related to the execution of financial transactions and payments between banks worldwide. Central Bank sanctions from the EU and the Fed instantly make Russia - and its currency, the ruble - pariahs elsewhere in the world.

 

I don't think that Russia and China can get together. They may temporarily
align forces against someone or something but they are natural adversaries.

Your article has a great point about SWIFT but they missed what was important
and what was not. They danced around the facts but don't see how they
interrelate.

Russia sells gas to Germany using SWIFT. For the world to implode like you and
others predict, that has to change. The Marionettist's will not let Biden shut Russia out
of SWIFT.

Nobody in the world trusts Russia or China, so they use SWIFT as a method of
exchanging goods for money. If the US was stupid enough to cut Russia totally
out of SWIFT then, Germany would have to go around it and EVERYTHING that
has been predicted about fiat currencies might start happening.

The theory in the article that China and Russia join forces to cause this to happen
will never happen because they are
1. Natural adversaries
2. They have zero trust for the other (because they aren't trustworthy)
3. China really, really, really still needs the US 

If the US went into a serious depression, tens of millions of Chinese would starve
to death. That is an excellent way to become an dead/ex-politburo member.

That's my two kopecks

[Manny]

The rouble is currently 139 to the £ (104 to the US$).

Time to buy Roubles I'd say.......

[NS1]

The rouble is currently 139 to the £ (104 to the US$).

Time to buy Roubles I'd say.......

I don't think you can lol.

But you may want to wait, I suspect going lower yet.

[andrewfi]

Bill, SWIFT is only a messaging system. The benefit of a messaging system is speed. By itself, it does not obviate other methods. In essence, it moves messaging back to phones and fax.

However, given the sanctions imposed upon Russian banks, it is now difficult for businesses receiving, for example, Euros or dollars to spend the currencies they accumulate. So, the effect may be that Russia chooses to denominate transactions in currencies other than these. The purpose of limiting SWIFT access as has been done is, supposedly, to enable buyers outside of the RF to purchase Russian goods and services. In practice, it does not achieve that goal, after all, who'd sell goods in a currency that has no use?

I expect that Russia will shortly alter the manner in which external purchases to certain buyers (companies or states) are paid. Russia has options here and I have no way to guess in which way they will go, but I do expect that payments will soon not be possible in Euros or dollars. They could choose to specify the Russian or Chinese messaging systems. Many German banks are already signed up for and ready to use MIR. But that will not obviate the currency issue.

Russia has, today, set up new arrangements within Russia due to take effect on March 1st. My guess is that these are preparatory to new arrangments that external buyers will need to deal with.

[2tallbill]

The rouble is currently 139 to the £ (104 to the US$).

Time to buy Roubles I'd say.......

It's at a 5 year low, you are probably right.

[NS1]

Currently looks like the world is selling Russian interests, not buying.
Other options are available, but most are slower, need confirmations etc.

I expected sanctions to hurt Russian, never dreamed it would be this quick.
Looks many will be long lasting.

[2tallbill]

Bill, SWIFT is only a messaging system. The benefit of a messaging system is speed. By itself, it does not obviate other methods. In essence, it moves messaging back to phones and fax.

However, given the sanctions imposed upon Russian banks, it is now difficult for businesses receiving, for example, Euros or dollars to spend the currencies they accumulate. So, the effect may be that Russia chooses to denominate transactions in currencies other than these. The purpose of limiting SWIFT access as has been done is, supposedly, to enable buyers outside of the RF to purchase Russian goods and services. In practice, it does not achieve that goal, after all, who'd sell goods in a currency that has no use?

I expect that Russia will shortly alter the manner in which external purchases to certain buyers (companies or states) are paid. Russia has options here and I have no way to guess in which way they will go, but I do expect that payments will soon not be possible in Euros or dollars. They could choose to specify the Russian or Chinese messaging systems. Many German banks are already signed up for and ready to use MIR. But that will not obviate the currency issue.

Russia has, today, set up new arrangements within Russia due to take effect on March 1st. My guess is that these are preparatory to new arrangments that external buyers will need to deal with.

I wrote it clunky as hell, but Germany and companies within German ALWAYS
denominate transactions with Russia in Dollars AND always uses SWIFT. That
has not changed with the sanctions.

Russia needs to change nothing to sell gas or other carbon energy to anybody in
the world. IF that were to change then big things that Manny, yourself and many
others predicted might come to pass.

Russia and China playing nice today is irrelevant to the US problems with it's
fiat currency.

[cufflinks]

I am not buying Rubles vaporware however as a ruthless contrarian this is a future ETFs buying Opportunity as the Buy of the Dip crowd is salivating:

Exchange-traded funds that offer the best way to gain exposure to Russia’s stock market were on pace for their worst month on record, as sanctions levied against Moscow, in response to its unprovoked attack against Ukraine, slam the Kremlin.

Exchange-traded funds that offer the best way to gain exposure to Russia’s stock market were on pace for their worst month on record, as sanctions levied against Moscow, in response to its unprovoked attack against Ukraine, slam the Kremlin.

The VanEck Russia ETF was down 28% on Monday, and down 54% so far in February, putting the popular ETF on pace for the worst monthly loss since its inception back in April of 2007.

War in Ukraine: Putin orders nuclear forces to high alert, Russian troops close in on Kiev

The fund now stands at around its lowest price since the depths of the financial crisis in 2008-2009, after the Central Bank of Russia announced the Russian stock market will be closed Monday as tightening sanctions in the wake of Russia’s invasion of Ukraine stokes extreme volatility in Russian assets and whacks the ruble.

The VanEck ETF has some $188 million in assets and carries an expense ratio of 0.67%, translating to an annual cost of $6.70 for every $1,000 invested.

Another popular Russia fund, the iShares MSCI Russia ETF also was aiming at its worst month on record. That ETF also was down by about 54% so far in February, which would represent its worst month since it launched in November 2010. The much smaller fund holds some $14 million in assets and carries an expense ratio of 0.57%.

Trading in several Russia-related stocks on the New York Stock Exchange and Nasdaq was halted Monday. Those include American depositary shares of steelmaker Mechel PAO  telecom operator Mobile TeleSystems  and Russian online real estate listings company Cian PLC CIAN, which the exchanges said were halted due to “regulatory concern.” Shares of search-engine operator Yandex NV YNDX and e-commerce platform Ozon Holdings PLC OZON were halted on the Nasdaq for news pending.

Because shares of Russian companies were halted in the U.S. and the Russia exchange is closed, the ETFs offer the clearest look into how sanctions impact businesses in Moscow.

Russian stocks listed in London came under heavy selling pressure on Monday.

The moves come as Russia’s ruble hit an all-time low of 119.25 per dollar on Monday, according to FactSet, before coming off its lows. In volatile, sporadic trade, it was last down 13.4% to 95.07.

Meanwhile, U.S. markets were also taking it on the chin, with the Dow Jones Industrial Average down more than 500 points, and the S&P 500 and Nasdaq Composite indexes underwater.

[2tallbill]

The moves come as Russia’s ruble hit an all-time low of 119.25 per dollar on Monday, according to FactSet, before coming off its lows. In volatile, sporadic trade, it was last down 13.4% to 95.07.

Meanwhile, U.S. markets were also taking it on the chin, with the Dow Jones Industrial Average down more than 500 points, and the S&P 500 and Nasdaq Composite indexes underwater.

The Russian Central Bank will raise its key interest rate from 9.5% to 20% per annum,
it said in a statement on Monday. “External conditions for the Russian economy have drastically changed,” the bank said in the statement.

The Fed debates raising the federal funds rate by a quarter of a percentage point, that's
equal to 25 basis points. The Russian bank is going to increase the interest rate by 
1050 basis points.

[NS1]

The moves come as Russia’s ruble hit an all-time low of 119.25 per dollar on Monday, according to FactSet, before coming off its lows. In volatile, sporadic trade, it was last down 13.4% to 95.07.

Meanwhile, U.S. markets were also taking it on the chin, with the Dow Jones Industrial Average down more than 500 points, and the S&P 500 and Nasdaq Composite indexes underwater.

The Russian Central Bank will raise its key interest rate from 9.5% to 20% per annum,
it said in a statement on Monday. “External conditions for the Russian economy have drastically changed,” the bank said in the statement.

The If the Fed raises the federal funds rate by a quarter of a percentage point, that's
equal to 25 basis points. The Russian bank is going to increase the interest rate by 
1050 basis points.

Currently, RUble is worth less than one US cent.
Imagine it could go lower.

[2tallbill]

I sent a few dollars to Smiley Girl in Russia this weekend. I wanted to send her dollars
but according to her no bank has dollars, so they convert it to rubles and then most
people spend it before it loses it's value. I wanted her to have some dollars socked
under her mattress for a rainy day in case they stopped transfers altogether.