Just the day before yesterday, I posted an article on the freefall of the Ruble, and it experienced a huge bounce that day.
I thought hard on why Ruble bounced up. One thing is certain, further sell offs of the Russian Ruble for USD is halted, which is why Ruble has risen in value and has stopped losing value against the USD.
Chart from tradingview
The value of the Russian Rubble has stopped falling since these 2 days
Measures put in place preventing sales of the USD Dollars in Russia
Now, the Russian Central bank has temporarily halted Russian Citizens from purchasing foreign currencies, particularly the US dollars, as commercial banks are not allowed to sell foreign currencies to these Citizens till September 9th.
Meanwhile in contrast, Russians are allowed to keep currencies in their foreign currency deposit accounts whereupon they keep earning interest as they were in whatever foreign currency they deposited.
Tradingview Chart
US dollars has stopped rising in value to Rubles as well in these past 2 days
Ruble survives with measures put in place to encourage the Ruble economy within Russia
However, the Russia Central Bank has allowed withdrawals of foreign currencies from foreign currency deposit accounts, if those currencies are converted to Russian Rubles at the exchange rate prevalent at that day.
Deposits of Russian Rubles to bank accounts is encouraged as well as bank deposit interest rates are hiked to 20%. This may explain why the Ruble has hiked up in USD value and its collapse for now is stopped.
Russia looks to encourage it’s Citizens to have access to CNY
This is one side of the coin, as Russia aims to stop its Citizens from buying up US Dollars. The Kremlin's long term aim is to stop having any financial transactions in the US Dollars within it's Russian economy.
Russian Citizens are allowed to withdraw 10,000 USD from their foreign deposit accounts and not more, this USD they can convert to Ruble, but Ruble has no use as it’s like a banned currency with all the sanctions outside against it and therefore has no real value.
Russia seems to know this, which is why it’s allowed its banks to open up deposit accounts in CNY, the Chinese Yuan.
VYB Bank has opened up deposit accounts in CNY, it’s one of the banks that’s hard hit with sanctions. VYB’s CNY deposit accounts offer an annual interest yield of 8%.
There are savings accounts offered by branches of Industrial and Commercial Bank of China (ICBC) in Russia, where depositors depositing CNY for a period of 3 years, earn annual interest rates ranging from 0.9% - 2%.
Trading view Chart of the Chinese Yuan against the Russia Ruble.
Russia may have ways to get around imposed sanctions thanks to its proximity to China
Well, this can mean that Russia has a way to negate the effects of sanctions and Swift expulsion by using the CNY currency and Chinese alternate payment channels.
Atleast Russian Citizens can survive on CNY deposits if Ruble collapses, which is a breather for Russians, although the effectiveness of sanctions to put pressure on Russia to stop war on Ukraine is doubtful.
My sympathies to all the Russians surviving in all this economic chaos.
Thank you for reading!!
Russia are just finding every means because the war between the two country should have stop with all the sanctioning, I think Russia are not that moved with the sanction to stop the war
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Yes, Russia being sanctioned has hurt them, but they do still have powerful allies like China. They also supply a large % of resources to the world such as oil and popular metals needed in batteries such as nickel. So Russia despite having most of the world against them does still some have some leverage and can cause trouble for many countries.
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It certainly looks like sanctions can't stop Russia from war. Thanks for reading and commenting!!
And BTW if they go through China for their finances nobody can stop them because NOBODY will sanction China's finances, that would be suicide.
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China is just like a Godfather for them
Posted Using LeoFinance Beta
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