Russian Economy General News: #7

Austin wrote:If Russian CBR dumps USD from Forex where it keeps $80 billion in USD , what other options is available to her if not buying more Euro or Gold.

Can he just replace the USD in its kitty with IMF SDR ?

IMF SDR's aren't the answer. Here's a link explaining a bit about IMF SDR's. I apologize if you already know a lot about the IMF's Special Drawing Rights system.  

IMF SDR factsheet

In the short term it is probably not realistic to expect a complete dump of all USD. However steadily buying a number of other currencies to replace a large portion of the USD is the best option available. Obviously, doing so would create a "basket" of currencies that reduces volatility risks when compared to buying Gold or another single alternative currency. I

n creating this basket, I assume you would also not want to hold the currencies of US allies. Some of those currencies to be excluded would be: Pound, Euro, Loony,  Yen, Won, Shekel, Australian Dollar, Taiwan Dolllar, Saudi Riyal, Qatari Riyal Danish Krone, Norwegian Krone, Hungarian Forint, Czech Koruna, Jordanian Dinar, Kuwaiti Dinar, Polish Zloty, Ukrainian Hryvnia, etc.).

Singular_Transform wrote:Seems like the output of the Russian car plant slightly up from the first three month of the last year.

The rolling 12 month flat.


Seems like if the interest rate drop then the car manufacturing go up.

Russian first quoter output up by something like 17%.

Iran manufacture slightly more car than Russia by the numbers, and it is up by 20%.
Russian car plants running around 60% cap utilisation.

A Different Voice wrote:

Austin wrote:If Russian CBR dumps USD from Forex where it keeps $80 billion in USD , what other options is available to her if not buying more Euro or Gold.

Can he just replace the USD in its kitty with IMF SDR ?

IMF SDR's aren't the answer. Here's a link explaining a bit about IMF SDR's. I apologize if you already know a lot about the IMF's Special Drawing Rights system.  

IMF SDR factsheet

In the short term it is probably not realistic to expect a complete dump of all USD. However steadily buying a number of other currencies to replace a large portion of the USD is the best option available. Obviously, doing so would create a "basket" of currencies that reduces volatility risks when compared to buying Gold or another single alternative currency. I

n creating this basket, I assume you would also not want to hold the currencies of US allies. Some of those currencies to be excluded would be: Pound, Euro, Loony,  Yen, Won, Shekel, Australian Dollar, Taiwan Dolllar, Saudi Riyal, Qatari Riyal Danish Krone, Norwegian Krone, Hungarian Forint, Czech Koruna, Jordanian Dinar, Kuwaiti Dinar, Polish Zloty, Ukrainian Hryvnia, etc.).

The principal problem is not that.

https://en.wikipedia.org/wiki/List_of_countries_by_current_account_balance

Russia still running 60/70 billion of trade surpluss.

There are two countries on the world that running bigger deficit than this, US and UK.

Means if Russia say buying say Korean won then all that it will do is nothing else just buying US goverment bonds throught a midle man, loosing money on due to the additional person in the chain, taking exchange rate risk, and doubling the political risk - not only the US will generate risk but Korea as well.You can replace Korea with whoever you want.

Still a lot of person doesn't realise :the US main control above the worl economy is its enormous trade deficit.

Russia can take the place of the US and make the rubel as reserve currency (at least partialy), it is easy.
Just allow foreign companies to caputre the internal market, let them to invest into russian financial instruments, and run a trade deficit in the range of 3-6% of the GDP for few decades.

Of course it will increase the unemployment : ) and force the cost of running international empire to the middle class.

A Different Voice wrote:

Austin wrote:If Russian CBR dumps USD from Forex where it keeps $80 billion in USD , what other options is available to her if not buying more Euro or Gold.

Can he just replace the USD in its kitty with IMF SDR ?

IMF SDR's aren't the answer. Here's a link explaining a bit about IMF SDR's. I apologize if you already know a lot about the IMF's Special Drawing Rights system.  

IMF SDR factsheet

In the short term it is probably not realistic to expect a complete dump of all USD. However steadily buying a number of other currencies to replace a large portion of the USD is the best option available. Obviously, doing so would create a "basket" of currencies that reduces volatility risks when compared to buying Gold or another single alternative currency. I

n creating this basket, I assume you would also not want to hold the currencies of US allies. Some of those currencies to be excluded would be: Pound, Euro, Loony,  Yen, Won, Shekel, Australian Dollar, Taiwan Dolllar, Saudi Riyal, Qatari Riyal Danish Krone, Norwegian Krone, Hungarian Forint, Czech Koruna, Jordanian Dinar, Kuwaiti Dinar, Polish Zloty, Ukrainian Hryvnia, etc.).

IMF SDR may not be the answer but its a good intermediate step based on basket of currency from many nations.

Instead of putting $80 billion on USD , it better to put half the amount in SDR to derisk the forex

https://e-news.su/in-russia/167416-nabiullina-proigrala-glazevu-cb-zapuskaet-pechatnyy-stanok.html

Interview with Raghuram Rajan ,He was our previous Central Bank Governor just a year back

Rajan Warns "The Fundamental Problems Of The Financial Crisis Are Still With Us

This topic has previously been covered in the Russian economy thread but news today could transform it so I have started this thread.

Last summer the NSA in the US was hit by a large hacking tools and data theft, parts of which have been slowly released. As part of a massively important release just made is a lot of information on the NSA's penetration of SWIFT. The US already has 'front door' access into SWIFT for terrorist related enquiries, little policed apparently, but for other reasons the US decided that it needed 'back door' access as well. This has now been publicly documented, no doubt to the huge anger of SWIFT who may well not known about it and their customers who definitely didn't.

This however presents a huge opportunity to the Russian, and Chinese, SWIFT analogue networks if they are able to take advantage of it. The strategic ramifications for the World's financial systems, the oversight of them and the US$'s place in them will be on a lot of peoples minds this Easter.

http://www.zerohedge.com/news/2017-04-14/latest-shadow-brokers-leak-reveals-nsa-hacked-swift-belgium-hq#comment-9380156

Russia's foreign debt in the I quarter increased to $ 529.7 billion

Moscow. April 13. INTERFAX.RU - Russia's foreign debt increased by $ 16.2 billion, or 3.1% in the first quarter of 2017 to $ 529.7 billion, according to information posted on the website of the Central Bank of the Russian Federation.

In the comments of the Central Bank said that the growth of the accumulated external debt was observed in all sectors of the economy and was largely due to the revaluation of debt denominated in the national currency, in terms of strengthening of the Russian ruble. In addition, the first quarter of 2017 was characterized by an increase in debt obligations of government and other sectors as a result of transactions with non-residents. In this case, the sectoral structure of Russian foreign debt has not changed significantly.

The external debt of non-banking sectors increased in the first quarter to $ 8.0 billion, or 2.3%, to $ 350.7 billion. The debt of banks increased in January-March to $ 2.6 billion, or 2.2%, to $ 129.389 billion. Debt Central Bank of Russia increased by $ 2.2 billion, or 17.9%, to $ 14.5 billion.

The external debt of general government rose during this period by $ 3.4 billion, or 8.6%, to $ 42.5 billion. Including liabilities to non-residents for government securities denominated in US dollars increased by $ 3.6 billion, or 14, 3%, to $ 28.6 billion.

Russia's foreign debt decreased by $ 84.1 billion in 2015, or by 14.0% - from $ 599.9 billion in 2016 - an additional $ 5.6 billion, or 1.1%, to $ 513.5 billion.

Austin wrote:Russia's foreign debt in the I quarter increased to $ 529.7 billion

Moscow. April 13. INTERFAX.RU - Russia's foreign debt increased by $ 16.2 billion, or 3.1% in the first quarter of 2017 to $ 529.7 billion, according to information posted on the website of the Central Bank of the Russian Federation.

In the comments of the Central Bank said that the growth of the accumulated external debt was observed in all sectors of the economy and was largely due to the revaluation of debt denominated in the national currency, in terms of strengthening of the Russian ruble. In addition, the first quarter of 2017 was characterized by an increase in debt obligations of government and other sectors as a result of transactions with non-residents. In this case, the sectoral structure of Russian foreign debt has not changed significantly.

The external debt of non-banking sectors increased in the first quarter to $ 8.0 billion, or 2.3%, to $ 350.7 billion. The debt of banks increased in January-March to $ 2.6 billion, or 2.2%, to $ 129.389 billion. Debt Central Bank of Russia increased by $ 2.2 billion, or 17.9%, to $ 14.5 billion.

The external debt of general government rose during this period by $ 3.4 billion, or 8.6%, to $ 42.5 billion. Including liabilities to non-residents for government securities denominated in US dollars increased by $ 3.6 billion, or 14, 3%, to $ 28.6 billion.

Russia's foreign debt decreased by $ 84.1 billion in 2015, or by 14.0% - from $ 599.9 billion in 2016 - an additional $ 5.6 billion, or 1.1%, to $ 513.5 billion.

Government share only 8%. Believe it shows more the favorable Russian economy that others are willing to invest in via loans in spite of US.

LNG Brings Russia And China Closer

http://oilprice.com/Energy/Energy-General/LNG-Brings-Russia-And-China-Closer.html

Tje swift is an international transaction system - actualy it is a secure communitation system for banks.


Russia has its own internal banking transaction system.

If russia and china want they can make an independent transaction system.

Austin wrote:LNG Brings Russia And China Closer

http://oilprice.com/Energy/Energy-General/LNG-Brings-Russia-And-China-Closer.html

There is the project that financing the new nuclear icebreakres.

If russia and china want they can make an independent transaction system.

Russia has to... as access to SWIFT will likely be another sanction target by the west if it is not already.

Russia already has its alternative to Swift, called "Mir":
https://en.wikipedia.org/wiki/Mir_(payment_system)
It was deployed because bank transactions from and to Crimea are cut from Swift, and because of fears that escalation of sanctions may lead to the entire Russian Federation being cut.

Svyatoslavich wrote:Russia already has its alternative to Swift, called "Mir":
https://en.wikipedia.org/wiki/Mir_(payment_system)
It was deployed because bank transactions from and to Crimea are cut from Swift, and because of fears that escalation of sanctions may lead to the entire Russian Federation being cut.

There are basically two different money transfer systems. Putting it simplistically, the first and biggest by volume is for clearing the billions of credit/debit card transactions whilst the second and biggest by value is for inter-bank clearing and account to account transfers. Both operate within countries and internationally, the first being typically performed by the US companies Visa/Mastercard and the second by SWIFT (based in Belgium).

Mir is not really an alternative to SWIFT as it seems to be primarily aimed at the first activity. It was rapidly set up at the start of sanctions to end the strategically critical vulnerability of card payment systems inside Russia to this area being sanctioned. China has a similar system, UnionPay I think, in place. Both will have their own gateways into the international card payments systems, to allow multi country payments/receipts, that are probably independent of SWIFT, I don't know.

SWIFT is the systems by which for example Russia gets paid for oil and gas and other exports, pays for imports and when Russian companies/people pay each other with a direct money transfer.

Russian companies seem to be complaining because these new Russian systems are more expensive than the existing foreign ones. Showing that they are no different from anyone else in putting their own interests first!

Number one priority for Russia was to remove the vulnerability to card traffic disruption which now seems to have been done. Second priority was to implement a SWIFT analogue using SWIFT transaction specifications allowing current SWIFT users to switch between the alternatives at will. There was a lot of talk about this two years ago but it then fell very quiet, which is probably to be expected given its strategic importance.

I don't know if the Mir system has has some SWIFT functions built in.

Can anyone here that is in Russia shed anymore light on this?

You pretty much summed up what is publicly known.

Here is the latest info on the subject:
https://www.rt.com/business/382017-russia-swift-central-bank/

Thanks, seems they have come up with a very catchy name for it SPFS, typical Russian PR fail.

Still the NSA stuff should give it a real boost.

Singular_Transform wrote:

Austin wrote:LNG Brings Russia And China Closer

http://oilprice.com/Energy/Energy-General/LNG-Brings-Russia-And-China-Closer.html

There is the project that financing the new nuclear icebreakres.

not only that is much bigger ,- you need icebrakers and floating powerplants for development in siberia.!!!

they are taking firm steps for fundamental development of siberia, and are going to basics- big rivers freeze november-april thats 6 months a year no construction no resupply. with icebrakers you have 3 more months of construction time making it more productive and less expensive to develop big new mines , hydropower projects, civilian and military bases , oil n gas fields ,etc... second now with icebrakers floating powerplants can go too to remote regions- you cant build anything without power! , (and heat) , so they are working from ground up and being very thorough doing it..

And a lot of the energy used is to go into heating... and a power station generates heat as a byproduct of generating electricity that can be used for heating too.

Q&A Jim Rickards

I get the impression that China did not veto UN Security Council Resolution on Syria and today on North Korea , In return for DT not labelling China as Currency Manipulator and also some trade benefits.

I wonder if China can now be trusted and it is open to negotiate its position for a price !

Austin wrote:I get the impression that China did not veto UN Security Council Resolution on Syria and today on North Korea , In return for DT not labelling China as Currency Manipulator and also some trade benefits.

I wonder if China can now be trusted and it is open to negotiate its position for a price !

Syria can be voted by Russia, so who cares.

Kores is out of control now, so China wants to force the leadership as well.

miketheterrible wrote:https://e-news.su/in-russia/167416-nabiullina-proigrala-glazevu-cb-zapuskaet-pechatnyy-stanok.html

Maybe Putin is waking up. The video linked from the article is good. Glazyev is totally on the ball with respect to the
motivations of Uncle Scumbag.

kvs wrote:

miketheterrible wrote:https://e-news.su/in-russia/167416-nabiullina-proigrala-glazevu-cb-zapuskaet-pechatnyy-stanok.html

Maybe Putin is waking up.   The video linked from the article is good.   Glazyev is totally on the ball with respect to the
motivations of Uncle Scumbag.  

No english translation for the vid...

In my father' generation I would of probably learned Russian as second. Instead I've English.

ATLASCUB wrote:

kvs wrote:

miketheterrible wrote:https://e-news.su/in-russia/167416-nabiullina-proigrala-glazevu-cb-zapuskaet-pechatnyy-stanok.html

Maybe Putin is waking up.   The video linked from the article is good.   Glazyev is totally on the ball with respect to the
motivations of Uncle Scumbag.  

No english translation for the vid...

In my father' generation I would of probably learned Russian as second. Instead I've English.

@kvs could you explain the video?