Ruble Tumbles Again

Ruble Tumbles Again

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The ruble tumbles again as paid provocateurs take over

buildings in cities in the eastern Ukraine and demand

referendums to make the largely Russian speaking eastern

parts of the Ukraine Russian.

http://www.theforexnittygritty.com/forex/ruble-tumbles-again


As reported in the online Binary Tribune, the USD/RUB

surges due to unrest in the eastern Ukraine.


http://www.binarytribune.com/2014/04/07/forex-market-usdrub-surges-the-most-in-a-week-amid-pro-russian-protests-in-ukraine/


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Russia’s annexation of Crimea at the beginning of last

month triggered a massive sell-off of the Russian currency and equities of the country.



Ruble’s demand continues to be pressured by simmering

tensions between Russia and the West, in what turns out to

be the worst conflict between the two parties since the end

of the Cold War. Pro-Russian protesters gained control

over state buildings in three eastern Ukrainian cities on

Sunday. Kiev’s pro-European government accused Russian President Vladimir Putin of fueling separatist disorder.



If Russia continues to fuel unrest in its neighbor things will

probably get worse for the Ruble. Both the USA and EU

have imposed a number of sanctions, freezing assets of

close associates of Russian president Putin. Britain is

asking the EU and USA to ramp up sanctions further which

is likely to happen if Russian does not remove the troops massed on the Eastern border of Ukraine.



Inflation as Well



When the value of a currency falls it does not just fall in

relation to other currencies. It falls in relation to

commodities as well.



This applies to imports but also to things produced locally.



Thus it is no surprise that as the ruble tumbles again that

inflation has hit a nine month high in Russia.


http://www.forexminute.com/economic-indicators/inflation-in-russia-hits-nine-month-high-on-crimea-tensions-27679


Inflation in Russia in the month of March was the highest in

nine months, fuelled by the decline of the ruble as the country faced off against the West over the Ukraine crisis.



Consumer prices grew 6.9 percent from a year ago, up

from a gain of 6.2 percent in February, according to the

Federal Statistics Service in Moscow. This exceeded the

average estimate of a growth of 6.8 percent in a Bloomberg

survey of 18 economists. Prices plunged 1 percent in

March, against forecasts of 0.9 percent as the economy slid further.



The ruble plunged as Russia entered into its biggest

standoff against the West since the Cold War, making it

harder for the central bank to keep inflation under 5

percent.



One certainly hopes that the worst relations between

Russia and the West since the Cold War will improve.



However, to the extent that Mr. Putin is playing to his

conservative constituency, he may just continue to poke at

an essentially defenseless Ukraine while the West can only

talk and ramp up sanctions.



However, if the sanctions make inflation worse it will not

play well in the hinterlands of Mother Russia and could well

be the factor that brings Mr. Putin to his senses before the

ruble tumbles again, and again and again.



Merkel Speaks



In a recent speech German Chancellor Merkel says that no

one should doubt EU resolve on Russian sanctions.


http://www.reuters.com/article/2014/04/05/us-germany-russia-idUSBREA340AW20140405


As reported in Reuters, the German leader noted that if

Russian continues on its present course further sanctions

will come.



"If the territorial integrity of Ukraine continues to be

violated, then we will have to introduce economic

sanctions," Merkel told a congress of her Christian

Democratic Union (CDU), kicking off its campaign for European Parliament elections next month.



"Nobody should doubt this. We are all different in Europe,

but we have the good fortune of being united, and together

we will take this decision," said the leader of Europe's

biggest economy which has close ties to Russia and has

played an influential role in shaping the West's response to

the crisis.



Forex traders will want to follow events closely if they wish

to trade the USD/RUB pair as the ruble tumbles again and again.



Ruble Tumbles Again

News & Politics

Transcript of Ruble Tumbles Again