Friday, March 12, 2010

Russian Ruble at 14-Month High Against Dollar-Euro Basket

The flight into the ruble?

Russia is still a very murky and dark place, as far as understanding domestic economic policies. That said, the strength of the Russian ruble against the dollar-euro basket is impressive.

Given Russia's rich natural resources, demand for the ruble is in a certain way understandable. But, it also signals that the Russian central bank is not printing excessive amounts of new rubles. Nothing can kill a currency's strength like a central bank running the printing presses.

It is not for conservative money, but someone with high risk money may want to consider placing a bet on the ruble.

1 comment:

  1. Don't go there without understanding it. It's not murky, it's just different. A good weekly review, much like your blog, can be found here (in Russian):
    He watches money supply too, and that's the reason for RUB strength in his opinion. In short, the money supply there has been contracting. Add to that the recovery in oil price and so the inflow of USD revenue.

    M2 (they have their own definition of these) in 2009 and 2010: