Thanks to the excess oil (not only) from fracking, the price dropped below $59 for the first time in a long time.
And because of this drop combined with the Russian dependence on the income from fossil fuels and because of sanctions against Russia that have almost cut the world's largest territory from loans, plus the hysteria surrounding these moves, the Russian currency dropped from 32 rubles per dollar in October 2013 to the high of 93.5 rubles per dollar earlier today. The ruble has recovered some ground since that time (to 80 now) but it may have been temporary.
The drop from some moment in Fall 2013 is by the factor of three. A crook named Michael Mann should look at the graph above if he wants to see what a real-world hockey stick graph should look like. And the graph doesn't even show the high at 93.5 today. Every day, the ruble seems to lose over 10% of the value. The half-life (in the sense of radioactivity) is about three days.
Meanwhile, in these extreme conditions, the Russian Central Bank is doing what is right – except for some interventions that always proved to be highly temporary. The last action was the increase of the interest rates from 10.5% to 17% less than one day ago.
Everyone else seems to be calm in Russia. There doesn't even seem to be any anger. I have tried to look at Russian newspapers but I wouldn't even see a single text that would blame the U.S. for this havoc. The Central Bank boss tells everyone to embrace the new financial reality while a region in Central Russia banned the word "crisis" in the public. I am just impressed by all of that.
The Russian media are not writing any complaints. At most, they inform about the exchange rate in a matter-of-fact fashion. And that's despite the fact that almost 1/2 of Russians keep their savings in rubles. In dollars or pretty much any other currency except for Hryvnia, over 1/2 of their savings were erased in a year.
Everyone in Russia seems to be calm or proud-to-be-independent or peaceful to an extent I simply cannot understand. Or is the nuclear war coming tonight, or on the day after tomorrow?
I admit (or believe) that it is more likely than not that if I were a Russian person who is co-deciding about these matters and if I had significant savings in rubles, I would have already endorsed nuking of Kiev, Brussels, and a few U.S. cities as the officially declared epicenters of the problems. Maybe, I would first order some professionals to counterfeit a trillion of dollars and try to revenge to the U.S. monetary system in a similar way. On the other hand, Sergei Lavrov repeats that NATO isn't Russia's enemy. Wow. A true saint who has to deal with hateful fascist jerks.
If you lose over 50%, it should be about 15 times more infuriating than if you lose about 3%, right? ;-)
Or would I start to support extreme proposals such as the return of Crimea to Ukraine? Probably not, especially because I wouldn't believe that it would fix things.
In August 1998, ruble underwent similar dynamics and Russia ultimately declared bankruptcy. (This time, everyone seems to assume that the Russian debt will remain OK.) It had a limited impact on the international markets but they were still detectable and unwelcome. Dow Jones Industrial Average went from 9,300 sometime in July 1998 to 7,600 in early September 1998, an 18% drop between the local extrema.
I can't believe that someone wants similar things to occur once again, just because most Russians disagree with him on the political situation and history of Ukraine or Crimea.
The 50-50 split of the Russian savers between rubles and dollars adds another dark dimension to the events. Clearly, the people who keep their savings in the U.S. dollars are traitors of some sort, and if they actively speculate on the ruble's demise, they will probably be treated as criminals pretty soon. Chaos in all of Russia could easily emerge because of that, too. Why would someone want it?
Responsible politicians in the West should do whatever they can not only to stop the insane sanctions but to undo most of the harm that has already been done. Or should we believe that the relationships between the countries are deteriorating in the runaway fashion analogous to the exponential curve of the USD/RUB relationship? Has this instability become unstoppable? If true, I demand charges of war crimes for those who began these hostilities.
Meanwhile, the "Nobel prize winner" Barack Obama plans new sanctions. A complete psychopath who deserves death penalty.