Putin says Russia should aim to sell energy in roubles
Source: Reuters
(Reuters) - President Vladimir Putin said on Thursday Russia should aim to sell its oil and gas for roubles globally because the dollar monopoly in energy trade was damaging Russia's economy.
"We should act carefully. At the moment we are trying to agree with some countries to trade in national currencies," Putin said during a visit to the Crimea region, which Moscow annexed from Ukraine earlier this year. (Reporting by Alexei Anishchuk; Writing by Dmitry Zhdannikov; Editing by Christian Lowe)
Read more: http://uk.reuters.com/article/2014/08/14/ukraine-crisis-putin-dollar-idUKL6N0QK3BP20140814
Botany
(70,291 posts).... Putin knows that Obama & the West's sanctions will put Russia in a
world of hurt.
JackRiddler
(24,979 posts)Oceania is Always Winning.
Fighting the fight for the whole world to save,
We the people will ceaselessly strive
To keep our great revolution alive!
Unfurl the banners! Look at the screen!
Never before has such glory been seen!
Oceania! Oceania! Oceania, 'tis for thee!
Every deed, every thought, 'tis for thee!
Every deed, every thought, 'tis for thee!
Every deed, every thought, 'tis for thee!
karynnj
(59,475 posts)Here is a chart showing the relationship between the euro and the ruble over the last two years. It does show something when the value of your currency loses nearly 20% of its value measured in another currency.
http://www.xe.com/currencycharts/?from=RUB&to=EUR&view=2Y
Fortinbras Armstrong
(4,473 posts)If the ruble was a hard currency, then it would make sense to trade using it. As it isn't, it does not make economic sense.
karynnj
(59,475 posts)I agree it makes no economic sense. It would be a very weird gamble as - for the country making it - the good side of the gamble is if the ruble continues to fall.
JackRiddler
(24,979 posts)is a kind of historical erection. I'm talking all of the ways we have of imagining value, including precious metals, dollars, derivatives, and all of the models for basing it in the "real," like oil reserves or total productive power of a nation. Currencies can be hard for historical minutes, or even for four hours (call your doctors!), but in the end, none of it lasts forever and all of it is subject to corrections and revivals. What "makes sense" shifts around, a lot.
Botany
(70,291 posts)Last edited Thu Aug 14, 2014, 02:46 PM - Edit history (1)
JackRiddler
(24,979 posts)politicat
(9,808 posts)(Regarding Putin's argument and the bunny pic, not you, Botany.)
TT_Progress
(67 posts)newfie11
(8,159 posts)Oil traded not in dollars.
karynnj
(59,475 posts)The US gains nothing when a contract between -say Russia and France - is expressed in dollars rather than euros or rubles. What it will do is expose both sides to the ups and downs of the currency in which it is written. This likely would be no bigger problem with euros compared to dollars, but the ruble may well - especially with sanctions - past and future - be far more unstable.
This does not necessarily help the Russians. This does not necessarily mean that contracting in rubles helps the Russians. Assume there are more sanctions and the value of the ruble falls in comparison with dollars. The amount that "France" must pay would in real terms is then lower if the contract for future payments is in rubles versus if is in dollars (or euros).
In fact, it sets up an interesting analyses for people comparing contracts from Russia and from other sources. Looking at a long term contract with several payments at specified points would mean converting each payment into the same currency. While that is easy to do for a payment at the current time, it requires modelling how both currencies will change over time. (This is a more complex version of what international travelers sometimes face when they can prepay their hotel or car rental fees ahead of time in dollars when booked or pay in local currency when the bill is settled. )
It is not clear how making things more complicated helps Russia sell their energy. Therefore, this seems a jingoistic, nationalist action that is really an empty threat to the US.
TT_Progress
(67 posts)The US has been living off an extraordinary situation, where it can literally manufacture dollars and then say, China, will take basically loans of electronic digits and in return ship real goods to the US.
The entire US economy is extremely dependent on maintaining this semi-monopoly, far too dependent on it.
That is why some are saying that using this advantage politically could actually boomerang. The US benefits by keeping the world engaged in the dollar, and that includes Russia.
IthinkThereforeIAM
(3,072 posts)... when countries trade oil/commodities in dollars, they have to keep a reserve of dollars on hand, this keeps the value of the dollar higher than it would be than say, if all oil/commodities trade was done in euros, or rubles as Putin dreams of.
The Second Stone
(2,900 posts)you intend to print the rubles and send the rest of the world energy? Don't you want something of value in exchange. Rubles are a joke currency.