Tuesday, 30 December 2014

The Bear Squeezes Back: Russian Ruble Rises against the Dollar


Sanctions introduced by the West against Russia are a form of hot economic warfare. But the attack on the ruble resulted in a competitive currency devaluation for Russia, limiting its ability to import from the West (saving foreign currency), and protecting the value of its declining volume of exports by increasing the number of dollars it receives for each devalued ruble.

As Michael Hudson has explained, Putin has responded to the U.S.-led sanctions movement by diversifying oil and gas exports towards China and Turkey, and signing sales agreements in rubles or currencies other than the U.S. dollar. By abandoning the U.S. dollar as its trading currency, and accepting payments in Chinese yuan, for instance, Putin is signalling his desire to break the stranglehold the U.S. currency has enjoyed over oil and gas trade, and within the world economy.

On December 22, China announced its willingness to support the ruble through currency swaps from its $4-trillion reserves.
http://www.globalresearch.ca/the-bear-squeezes-back-russian-ruble-rises-against-the-dollar/5421619

Currency wars are afoot.

[Posted at the SpookyWeather blog, December 30th, 2014.]

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