Ruble strengthens against the dollar

Ruble stronger than the dollar

The Russian economy is the enemy to be put down and the sanctions imposed by a powerful part of the world (US, Europe, UK) are aimed at this purpose, nonetheless David (the economy of the trans-continental country) seems stubbornly resisting Goliath (the US and the West). 

What happened on Monday is a major development in a world plagued by economic, political, and energy problems, with Moscow’s economy holding up better than America’s, and this is reflected in the exchange rate between the two currencies. 

On Monday, 20 June, the Ruble reached its highest peak in seven years and was trading at $55.47. 

The surprising performance is proof that the European Central Bank President’s misgivings were well-founded when she said 

“If countries immediately sanction imports of Russian oil, Vladimir Putin could bring the oil he does not sell to the European Union to the world market, where prices will rise, and sell it more expensive”.

The boycott of imports of energy resources from Russia such as gas and especially oil seems to have been a resounding boomerang as Martin Armstrong of Armstrongeconomics.com states. 

“In April, Russian oil exports increased by 620,000 barrels per day to 8.1 million barrels per day. India (+730,000 barrels per day) and Turkey (+180,000 barrels per day) helped offset the ‘international embargo, while the EU remained the main importer despite a sharp reduction in shipments. The IEA reported that Russian oil exports increased by more than 50% year-on-year during the first four months of the year: the boycott completely backfired against the West and helped strengthen the Russian economy”.

Not only China therefore, but also India and Turkey ( a close friend of Europe) have responded to the Kremlin’s appeal by making bilateral agreements that allow them to discount prices at least 30% lower than the Brent sold to Europe. 

Emblematic is the case of India, which buys an extra 730,000 barrels of oil from Russia every day at bargain prices and then resells them to the EU, earning on the price difference with a business that weakens the old continent more and more every day and simultaneously benefits both Russia and India. 

Is the Russian economy a danger to the West?

That the Russian economy should be kept under close observation as a potential and real danger to the West (a danger in addition to the military one) is also the opinion of a certain part of the Atlantic countries.

An editorial entitled “Don’t ignore the exchange rate: How a strong ruble can shield Russia” written by Charles Lichfield, Deputy Director of the Geoeconomics Center of the Atlantic Council, points in this direction. 

Of a different opinion is YouTuber Jake Broe, who on his channel with 146,000 subscribers explains how data on the Ruble and propaganda are giving a distorted view of reality and explains:

“the Russian economy is currently collapsing, inflation is high, unemployment is rising, wages are falling, the GDP of the Russian economy is collapsing”.

This, however, could also be said of the American economy, as those who pay attention point out, with more relevant figures in hand. 

We might be facing a self goal by the West basically, but only time and numbers can tell, figures that for now are on the Kremlin’s side.