Russian President Vladimir Putin looks at his 21 percent drop in the past three months and blames those nasty “speculators.” But should the Russian Oligarch really get a copy of the book “Currency Wars” to understand why his currency is dropping like a lead balloon?
Putin notes that his company, hard hit by a drop in oil prices and paying an apparent price for his military adventures in the Ukraine.
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Putin sees speculative jumps in the ruble rate
“We can see speculative jumps in the ruble rate but I think it will soon end,” Putin told those attending the APEC Beijing summit today, according to a Bloomberg report. “It is absolutely not connected to fundamental economic factors.”
When Russia took military steps in the Ukraine, President Obama mentioned the bite of US sanctions, but what wasn’t much said is how a sovereign power can be hard hit in a currency war, a very real phenomenon. As the book Currency Wars points out, the US is documented to use currency as a weapon in global conflict, causing certain currencies to rise and fall based on a variety of manipulative maneuvers to suit its foreign policy objectives.
Putin: Securing the value of a currency
Putin even noted an old method of securing the value of a currency, noting the Bank of Russia’s international currency and gold reserves remain at a strong levels. This hasn’t helped as the ruble has dropped 21 percent in the past three months, making it the worst performance of about 170 currencies tracked by Bloomberg. The currency, however, headed for its first two-day gain since September, strengthening 1.9 percent to 45.7535 versus the dollar as of 10:35 a.m. in Moscow, according to the Bloomberg report.
Putin told the Chinese-based conference that his monetary authority is moving ahead with its planned shift to inflation targeting, which is intended to send a message that he is not intending to impose capital controls in Russia. Then he made a most interesting statement, calling to boost ruble-yuan settlements for energy supplies, which he said would decrease the dollar’s dominance in global energy markets. This is an attack on the Petrodollar, one key to keeping the US the reserve currency of choice, a move that Currency Wars author James Rickards said the US appears to be abandoning this control.