http://www.forexconspiracyreport.com/how-far-will-the-ruble-fall/ How Far Will the Ruble Fall? The Russian Ruble appears to be in free fall versus the US dollar. How far will the Ruble fall and will it recover? The key to this dilemma is the approach that Russian President Putin is taking in annexing Crimea and supporting separatist in Ukraine. In February of this year we wrote about the Forex response to violence in Ukraine. At that time a Ruble was worth 2.7 cents. Today a Ruble is worth 2.2 cents and it appears to be on its way farther down. The Ruble was reasonably steady around the three cent range at the beginning of the year and this, in fact, is where it way for most of the last five years. Then Mr. Putin became concerned about the overthrow of a corrupt leader in Ukraine as the result of street demonstrations. Mr. Putin wants Ukraine in the Russian economic orbit and most of Ukraine want to be allied with the European Union. As a result of the Russian annexation of Crimea, part of Ukraine, and support of armed separatists, the EU and USA have levied sanctions against the Russian Federation. These actions have reduced credit to Russian industry and banks. As a result of these sanctions there is a flight of capital out of Russia. And now the price of oil has fallen, reducing the Russian trade surplus. Price of Oil and the Russian Trade Surplus An article in Bloomberg notes that falling oil prices are cutting into the Russian trade surplus. Russia’s trade surplus narrowed in September to the lowest in seven months as falling oil prices cut export revenue during President Vladimir Putin’s escalating standoff with the U.S. and the European Union over Ukraine. The surplus fell 20 percent from a year earlier to $13 billion, the central bank in Moscow said today on its website. The median estimate of 14 economists surveyed by Bloomberg was $15.7 billion. Imports decreased 10 percent to $25.8 billion and exports fell 13 percent to $38.8 billion. Russia’s central bank said yesterday that the sanctions, compounded by falling oil prices, are weighing on the economy of the world’s biggest energy exporter. Growth is the slowest since a 2009 recession and may be zero next year, it said. “A stronger-than-expected decline is negative for the ruble as the trade surplus is the main underlying factor of support for it,” Vladimir Osakovskiy, chief economist for Russia at Bank of America Corp. in Moscow, said by e-mail. “However, we think that the dated nature of the release should constrain its negative market implications.” Saudi Arabia is increasing production even as its OPEC colleagues ask for cutbacks. The USA is awash in energy due to the oil fracking boom. There is no sign of a letup in Saudi or US oil production and how far the Ruble will fall is directly related to how far there trade surplus falls. China to the Rescue? Mr. Putin is in Beijing for a meeting of Asian Pacific leaders.

1. By www.ForexConspiracyReport.com

2. The Russian Ruble appears to be
in free fall versus the US dollar.

3. How far will the Ruble fall and will
it recover?

4. Before We Continue…
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5. The key to this dilemma is the
approach that Russian President
Putin is taking in annexing Crimea
and supporting separatist in
Ukraine.

6. In February of this year we wrote
about the Forex response to
violence in Ukraine.

7. At that time a Ruble was worth 2.7
cents.

8. Today a Ruble is worth 2.2 cents
and it appears to be on its way
farther down.

10. The graph from Google
Finance shows us that the Ruble
was reasonably steady around the
three cent range at the beginning
of the year and this, in fact, is
where it way for most of the last
five years.

11. Then Mr. Putin became concerned
about the overthrow of a corrupt
leader in Ukraine as the result of
street demonstrations.

12. Mr. Putin wants Ukraine in the
Russian economic orbit and most
of Ukraine want to be allied with
the European Union.

13. As a result of the Russian
annexation of Crimea, part of
Ukraine, and support of armed
separatists,

14. the EU and USA have levied
sanctions against the Russian
Federation.

15. These actions have reduced credit
to Russian industry and banks.

16. As a result of these sanctions
there is a flight of capital out of
Russia.

17. And now the price of oil has
fallen, reducing the Russian trade
surplus.

18. Price of Oil and the Russian
Trade Surplus

19. An article in Bloomberg notes that
falling oil prices are cutting into
the Russian trade surplus.

20. Russia’s trade surplus narrowed in
September to the lowest in seven
months as falling oil prices cut
export revenue during President
Vladimir Putin’s escalating
standoff with the U.S. and the
European Union over Ukraine.

21. The surplus fell 20 percent from a
year earlier to $13 billion, the
central bank in Moscow said today
on its website.

22. The median estimate of 14
economists surveyed by
Bloomberg was $15.7 billion.
Imports decreased 10 percent to
$25.8 billion and exports fell 13
percent to $38.8 billion.

23. Russia’s central bank said
yesterday that the sanctions,
compounded by falling oil prices,
are weighing on the economy of
the world’s biggest energy
exporter.

24. Growth is the slowest since a
2009 recession and may be zero
next year, it said.

25. “A stronger-than-expected
decline is negative for the ruble as
the trade surplus is the main
underlying factor of support for
it,” Vladimir Osakovskiy, chief
economist for Russia at Bank of
America Corp. in Moscow, said by
e-mail.

26. “However, we think that the dated
nature of the release should
constrain its negative market
implications.”

27. Saudi Arabia is increasing
production even as its OPEC
colleagues ask for cutbacks.

28. The USA is awash in energy due to
the oil fracking boom.

29. There is no sign of a letup in
Saudi or US oil production and
how far the Ruble will fall is
directly related to how far there
trade surplus falls.

30. China to the Rescue?

31. Mr. Putin is in Beijing for a
meeting of Asian Pacific leaders.

32. He took the opportunity to finalize
a deal with China to supply
natural gas.

33. This may be grandstanding or it
may be a genuine attempt to
solidify links with China, its old
Communist neighbor.

34. According to the online Financial
Times:

35. When Vladimir Putin met China’s
president Xi Jinping on Sunday, a
memorandum of understanding
for a second massive gas supply
deal caught most of the attention.

36. For the Russian president, the deal
may be less appealing for its
commercial benefits than its
ability to advance a larger
strategic goal of cementing ties
with its eastern neighbour.

37. To the extent that Russia can
make up for lost revenue by
upping its sales to China that may
be an answer to how far the Ruble
will fall, namely this far and no
farther.

38. Remember, however, that the two
old Communist allies are actually
enemies in many ways.

39. In the days of the so called Sino
Soviet bloc there were battalion
sized battles on the Russian China
frontier.

40. Better for Mr. Putin if he mends
fences with the West

41. But it would take a great deal of
effort for someone who believes
that the worst thing to ever befall
Russia was the breakup of the old
USSR.