It's not taboo, it's just not very interesting, or rather it's a load of rubbish, which the article touches on.
Russia has imposed capital controls, which essentially means it's easy to buy roubles but next to impossible to sell them though official channels without permission. It's not a free market.
The price on the black market, which is mostly free, is much lower.
So more or less the government has set the price of the rouble and made it artificially high. So what?
"Russia has imposed capital controls, which essentially means it's easy to buy roubles but next to impossible to sell them though official channels without permission. It's not a free market."
Except that isn't the case is it. The Russian central bank reversed its charges in mid April. Interest rates have been cut.
In reality the capital controls were imposed by the West by freezing the ability of the Moscow Exchange to use its correspondent accounts to settle in other countries and other currencies, and preventing the citizens of the West from transacting on the Moscow Exchange.
If you have roubles in Russia you can sell them for dollars on the Moscow Exchange, but they will remain Eurodollars within the Exchange clearing system, because the NCC can't currently clear into any area controlled by the Fed.
The belief that the rouble would be lower if only the Russians weren't stopping things just isn't the case.
The rouble is the value it is from a simple supply and demand point of view. Euros are being exchanged for roubles on the Moscow exchange because Europe is buying power from Russia, and roubles are not being exchanged into Euros and Dollars because there is no way to use those currencies to buy anything from the West to ship to Russia.
Inevitably that will cause the rouble exchange rate to go up - and it is being kept down by the Bank of Russia holding 'Eurodollars' on the Moscow Exchange and issuing new Roubles against them. Which ensures Gazprom et al get a decent amount of money to pay the workers in Russia who are extracting the gas and oil.
Those in the West have the basics of how currencies work wrong. They are public monopolies. The fantasy of a 'free market' is just that. If you hold a fiat currency, you are at the mercy of the rules of the currency issuer - who can change those rules on a whim.
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[ 3.2 ms ] story [ 38.7 ms ] threadRussia has imposed capital controls, which essentially means it's easy to buy roubles but next to impossible to sell them though official channels without permission. It's not a free market.
The price on the black market, which is mostly free, is much lower.
So more or less the government has set the price of the rouble and made it artificially high. So what?
Except that isn't the case is it. The Russian central bank reversed its charges in mid April. Interest rates have been cut.
In reality the capital controls were imposed by the West by freezing the ability of the Moscow Exchange to use its correspondent accounts to settle in other countries and other currencies, and preventing the citizens of the West from transacting on the Moscow Exchange.
If you have roubles in Russia you can sell them for dollars on the Moscow Exchange, but they will remain Eurodollars within the Exchange clearing system, because the NCC can't currently clear into any area controlled by the Fed.
The belief that the rouble would be lower if only the Russians weren't stopping things just isn't the case.
The rouble is the value it is from a simple supply and demand point of view. Euros are being exchanged for roubles on the Moscow exchange because Europe is buying power from Russia, and roubles are not being exchanged into Euros and Dollars because there is no way to use those currencies to buy anything from the West to ship to Russia.
Inevitably that will cause the rouble exchange rate to go up - and it is being kept down by the Bank of Russia holding 'Eurodollars' on the Moscow Exchange and issuing new Roubles against them. Which ensures Gazprom et al get a decent amount of money to pay the workers in Russia who are extracting the gas and oil.
Those in the West have the basics of how currencies work wrong. They are public monopolies. The fantasy of a 'free market' is just that. If you hold a fiat currency, you are at the mercy of the rules of the currency issuer - who can change those rules on a whim.
"The rouble retains support from the obligatory conversion of 80% of FX revenues by export-focused companies"
https://www.reuters.com/business/rouble-falls-sharply-russia...
"The rouble has rallied in the past few weeks thanks to mandatory conversion of foreign currency by export-focused companies."
https://www.zawya.com/en/markets/currencies/rouble-hits-over...
It’s basically pointless. You cannot trade the Ruble. So any discussion about what price it trades at isn’t even academic. It’s pointless.
This in and of itself is unusual
https://www.bloomberg.com/news/articles/2022-05-11/russian-r...