Ok folks, this is not a good thing if you are the Russian Federation.
👇👇👀💥
From January, the Central Bank and the Ministry of Finance of the Russian Federation begin selling Chinese yuan from the National Wealth Fund under the "budget rule" - by 3.2 billion rubles a day and 54.5 billion rubles a month (until February 6).
The market and the budget need the currency: due to the “ceiling in oil prices”, Russia is losing $170 million a day, and government revenues from oil rent in December collapsed by 33% year-on-year.
@Politkrem
С января ЦБ и Минфин РФ начинают продажу китайских юаней из Фонда национального благосостояния в рамках «бюджетного правила» - на 3,2 млрд рублей в день и 54,5 млрд рублей за месяц (до 6 февраля). Всего в ФНБ 310 млрд юаней на 3,3 триллиона рублей - и это все, что осталось от ликвидной части «кубышки», которую государство копило с 2017 года. Другие валюты попали под санкции и были заморожены вместе с золотым запасом ЦБ, на который США наложили отдельные ограничения еще в апреле. Валюта нужна рынку и бюджету: из-за «потолка цен на нефть» Россия теряет по $170 млн в день, а доходы правительства от нефтяной ренты в декабре рухнули на 33% год к году. @Politkrem
I think it’s a lot less clear what is going on - by design not accident.
First of all the ‘loss’ might not all be ‘out of pocket’ - there could be some ‘unrecovered amortization’ in that number. Losses on paper but not an immediate hot to reserves.
On the other hand it could be worse - could be some of the revenues they are reporting now were from contracts booked at higher prices earlier - there is so little transparency it’s hard to tell.
Here are other things to watch from those numbers … 3.3T rubles worth of yuan in SWF and a reported sell rate of 55B rubles/month. That’s 5 years if my math is right. So is that mystery loss of oil exports (whatever it really is) covered by that? Or an additional burden?
And it was reported about two weeks ago Russian banks had transfers of 1.5T rubles out of country last quarter. 500B per MONTH.
Two quarters prior it was in the 500B rubles per QUARTER so 3X.
These are aggregate transfers from banks in Russia to institutions outside Russia (banks I presume) not net in/out balances so no idea if/which banks hurting. Nor did it say what these transfers were for. Assumed ‘purchases’ but of what?
More questions than answers.
@McPatrick @Nadinabbott I keep going back to the same question I ask everyone including @Nadinabbott … “What do we know about the black market in Russia now?” Both for goods and for currency exchange. I am told by most who have better contacts than I do “It’s not bad there - now”
In my opinion when either or both becomes obviously bad we are close to a break point.
YMMV
@Nadinabbott @McPatrick
There is but I was on spaces recently where an econ researcher from Finland was highlighted. She also had roots back to cold war and agreed - there is always some smuggling and black market but it’s NOTHING like back in 1980s for either right now.
Two differences then and now (1) currency is still flooding in to Russia from commodity exports and (2) if you can get something in country you can sell it LEGALLY at whatever price you want
She thought the black market for consumer goods won’t be an issue so long as few or no sanctions on those. She thought (and most on forum agreed) black market for ‘strategic goods’ already raging but fully sponsored by state. Plus invisible to us.
She said watch the street currency exchange - that will be the canary in the coal mine. So far canary is alive. 🤷♂️
You are my go to source for those 😂
nadin brzezinski
Patrick McLaughlin
dryfly