Now that oil prices are sliding southward again, roubles are getting on the sled, too. Businesses in Russya are beginning to exhibit strategies for dealing with the rouble's volatility. The businesses are denominating prices in Euros and in dollars. Oh, my. Did Vova think the currency issue would evaporate anytime soon?
Not really. He knows that the price of oil will determine the path of Russya's economy for sometime to come. The poor man cannot put together the ideas that 1) the invasion of Ukraine was a bad idea, 2) the invasion/annexation of Crimea was a bad idea, 3) ordering the destruction of sanctioned Western food products was a bad idea. Hence the perception of Western leaders that Mad Vlad is not a serious leader, only a ghost of a serious leader.
The videos of bulldozers treading over piles of cheese, calamari, and peaches, indicates that Russyans are not happy about the Kremlin's orders to destroy the victuals. Many crafty importers know how to evade the sanctions, and now a game of cat and mouse between inspectors and importers is the new national pastime this summer.
If oil prices get to $30/barrel this autumn, Russyan bankers will have to intervene using the national reserves of foreign currency, now at about $130 billions. These could be gone in less than a year. Then, watch out.
Recent forays into Pakistan would will not save the rouble or Russya. Pakistan is not a serious contender for 2nd world status, pipeline or no pipeline.
Stay tuned as the global economy becomes a little shakier.
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