|Forex speculating "Hitlers," watch your backs.|
President Vladimir Putin pledged to punish speculators attacking the ruble with “harsh” measures in a defiant speech that reached into Russian history to defend his annexation of Crimea and compared his international opponents with Adolf Hitler...Actually, his bluster does not match his actions since he's actually welcoming back monies that left the country via capital flight. I wonder why they're leaving...
Putin, who did not address falling oil and gas prices, also announced plans for an amnesty on capital returning to Russia and said he’ll work to eliminate unnecessary bureaucracy as he tries to reassure a nation threatened by a spiraling economic crisis. The ruble is near a record low, the economy is headed for a recession and banks are pleading for state aid. The ruble has lost a third of its value since Putin started his incursion into the Ukraine’s Crimean peninsula in March, the most among 24 developing countries Bloomberg tracks.Oddly enough, this comes despite Russia choosing not to defend the currency in recent times. With so many contradictory statements, you have to wonder what the country will really do:
“The Bank of Russia has moved to a free floating ruble but this doesn’t mean it is distancing itself completely from influencing the ruble and that the exchange rate can become a target for financial speculation,” Putin said. “The authorities know who these speculators are and the instruments we can use to influence them. The time has come to use these instruments...”Putin is almost becoming Maduro-like with his wild anti-Western conspiracy theories. Besides, he didn't describe what he'll be doing to tamp down the speculators via "harsh" measures. Ironically, I think it's Russians fleeing Russia doing significant damage to the ruble--hence the "amnesty" for returning capital. Until Putin actually does something more than bluster, it's all bluster and market participants will act accordingly:
The Bank of Russia today reduced the rate it charges banks to borrow foreign currency in a bid to slow the ruble’s slide and ease a dollar shortage. The ruble has “substantially” deviated from its fundamental value, creating risks for financial stability and spurring expectations of inflation and depreciation, the central bank said in a statement on its website, reiterating its readiness to intervene without limits.
“Putin failed to scare speculators,” Bernd Berg, a London-based strategist at Societe Generale SA, said by e-mail after the speech. “Unless the central bank comes in with some meaningful measures like significant FX interventions in the size of a couple of billion, or aggressive tightening measures, the ruble will remain under massive selling pressure as fundamentals in Russia deteriorate by the day.”