All The Best
THE ELEPHANT BAR IS CLOSED
I want to thank everyone who participated in the Elephant Bar over the past twelve years. We had millions of visitors from all around the World and you were part of it. Over the past dozen years, two or three times a night, I would open my laptop and some of you were always there. I will miss that.
My plans are to continue my work with technology and architecture. You know my interests and thoughts.
At times, things would get a little rough in the EB. To those of you that I may have offended over the years, I apologize. From all of you, I learned and grew.
An elephant never forgets.
Deuce, 21 June 2018
Tuesday, December 02, 2014
Russia, where investment money goes to die
Russia intervenes as crumbling rouble echoes 1998 debt crisis
Collapse in Russian currency, which has been badly buffeted by a plunge of almost 40% in oil prices, prompts central bank action
Larry Elliott, economics editor GUARDIAN
Monday 1 December 2014 14.17 EST
Russia’s central bank was forced to step in to defend the rouble on the foreign exchanges on Monday after fears over the economy’s vulnerability to a weak oil price sent the currency to a record low against the dollar.
Moscow was forced to abandon its hands-off policy towards the rouble amid heavy selling, unmatched since the Russian debt default of 1998. The Russian central bank intervened when the rouble was down 6.5% on the day against the US dollar, and by the close of trading the currency had recouped more than half its earlier losses.
A bounce in the oil price from a fresh five-year low and a sense that the sell-off since last week’s meeting of the Opec cartel has been overdone helped sentiment towards the Russian currency, which has been badly buffeted by a plunge of almost 40% in the cost of crude since the summer.
Data from the US suggesting that drilling activity in the shale oil sector is being affected by lower oil prices also helped the rouble by pushing down the value of the dollar. Oil is denominated in dollars, so when the US currency falls oil becomes cheaper and more attractive for holders of other currencies.
With Moscow fearful that the drop in the value of the rouble makes Russia vulnerable to capital flight, Ksenia Yudaeva, the Russian central bank’s deputy chairwoman, told newswires that households should not panic. She said the rise in interest rates to 9.5% should encourage them not to convert savings into euros or dollars. “It’s necessary to explain to people that the yield they get on their deposits at the moment will guarantee a high degree of safety for their savings with regards to inflation. They should think twice before rushing out, losing the yield on their deposits, taking on currency risks and losing money on their currency conversions.”
But Lee Hardman, currency strategist at Bank of Tokyo-Mitsubishi, said falling oil prices were “reinforcing the loss of investor confidence in the rouble” at a time when it was affected by western sanctions imposed over Ukraine. At one stage on Monday, Brent crude was trading at $67.50 a barrel, a fresh five year low, before recovering to $71.90.
“There’s a sense that the market got a little bit ahead of itself, and we’re seeing some producer buying come in and it’s driving the market back up,” said Phil Flynn, analyst at the Price Futures Group in Chicago. Oil is still down about 10% since producer group Opec’s decision last Thursday not to cut output despite fears of a supply glut.
Saudi Arabia, the most influential member of the Organization of the Petroleum Exporting Countries, blocked moves by some smaller producers to curb output. The Saudis argued that low prices would ultimately hurt US shale oil production, which analysts say is responsible for much of the oversupply now.
Capital Economics said a degree of calm had returned to markets after weekend talk of a commodity-led meltdown. It said the apparent freefall in crude prices had been exaggerated by thin trading due to the US holiday, adding that the impact of lower energy costs would be positive for global growth.
Posted by Deuce ☂ at 12/02/2014 04:42:00 AM