Since the first spike of the ruble past 37/USD, it dropped below 37 a couple of times, but in the later hours of trading on Saturday remained resolutely above 37 and the last readings from xe.com show steady at 37.06 (sort of a weekend "close" of currency trading).
What Russia does when the ruble is falling, is to buy up rubles using its large reserves of foreign currencies, in order to shore up the exchange rate. So we can assume that Russia poured out billions of dollars and euros during the closing days of August.
This may be significant: although Russia's foreign reserves are large (about $400 billion), especially in relation to Russia's rather small GDP (just a little more than Italy's), they are also finite. Russia's central bank can only hemorrhage dollars for so long before their supplies run low.
As I mentioned in an earlier reply in this topic, Russia has reportedly been unable to borrow in the major currencies of democratic states (dollars, euros, yen) for almost eight weeks now.
Another consideration is that reportedly, something like $100 billion in Russian capital has been sent out of the country since the invasion of Crimea, because Russia's wealthiest fear what could happen to their fortunes. Some claim that the actual amount could be nearly double the official figures. This "capital flight" is presumably in dollars or euros for the most part -- no non-Russian bank would accept deposits in rubles! If I am analyzing this correctly, this exportation of foreign currency in private hands (and the unwillingness of Russian citizens to lend out what foreign currency they have in Russia, who would hate to exchange their dollars for plummeting rubles) lessens Russia's ability to supplement its foreign reserves with private participation.
A couple of evenings ago, I saw a TV news report that Rosneft, one of Russia's state-owned giant petroleum companies, has something like $24 billion of loan payments coming due in the next few weeks. Rosneft doesn't have the dollars to make these payments, and has asked the central bank for help -- another draw on the dollar reserves.
Presumably, Russia can "refill" its foreign-currency coffers by selling petroleum in euros and/or dollars. However, if petrodollars don't come in fast enough to keep up with the present drawdown, Russia could face increasingly difficult challenges.
The "end of the line" for such a situation, would be default on foreign debts. I suspect such a default could start a very harsh "snowball effect" seriously damaging every corner of Russia's economy.
Of course, Russia would struggle to prevent such a situation ... but along the way of trying to forestall default, I expect there would be many awkward and stressful stages.
"as Russia releases dollars to strengthen the Ruble, doesn’t the value of the dollar go down?"
Disclaimer: My understanding of this stuff is Very Basic.
Answer 1: No, because at any given moment, about 90% of USD are in accounts or funds of various types, quite a lot of these dollars outside the US. When a government pays US dollars out of its reserves, these dollars basically move out of one account into another. That doesn't change anything about what dollars do or how much they are valued.
Answer 2: A lot of things affect exchange rates. Doubling the supply (of currency) doesn't necessarily cut the value of that currency in half. In any case, transfers like Russia is making don't affect the supply at all.
Answer 3: When currencies go unstable, holders of those currencies are very anxious to exchange them for the most stable currencies, such as dollars, euros, or perhaps renminbi (Chinese yuan). So perhaps, as millions of Russians want safer currencies, this could make dollars a little bit MORE valuable.
Answer 4: There are a lot of ignorant ideas (especially on the internet!) about money. Particular exchange rates aren't inherently good or bad; they just mean different things. If Russia _could_ push the dollar downward by 5% (and I can't imagine how they would do such a thing), it would mean that US imports would cost 5% more, a pretty substantial hit. But it would also mean that minerals, services, manufactured goods and intellectual property sold by the US would be 5% cheaper in other countries, encouraging increased exports from the US to abroad, which would boost parts of the US economy. If the total loss to the US in this example were $100 billion in a year (just a guess, but maybe in the right ballpark), that would obviously be felt, but our economy is about $20,000 billion per year: it wouldn't be a calamity.
An important difference between the US and many other countries, is that almost all of our debts are in our own currency. If we borrowed a certain sum from the UK, China, or Germany and the dollar dropped 5% ... or even 25% ... that's tough news for the foreign bank, because we'll pay the agreed number of dollars and the entire loss is on their side.
But when Russian firms borrow foreign money for capital programs, they can't borrow in rubles. So when the ruble drops 20% (about what has happened in the past year), all of their interest and principal payments on foreign debt are 20% bigger ... probably not so much fun for them.
So the long and the short of it is, if a foreign power wanted to attack the US by manipulating dollars, they would find it very difficult to do (and probably awfully expensive), and the damage to the US would probably be slight.
In the past couple of hours, I've had a web page open that shows the ruble in real time. It's a bit like following a sporting event online.
Though there was a brief dip back into the high thirty-sixes a few hours ago, the trend has been steady weakening to its record of 37.4 / USD. Looking at intervals of about 15 minutes, every time it has been weaker than before.
The latest is 37.42 / USD.
This can mean only one thing: Russians are aggressively dumping rubles, using them to buy stable currencies.
I wonder, could this have anything to do with Russia's brutal tsar saying to the world, "don't mess with us, we got lots of nukes?" Or again using the name "Novorossiya?" Perhaps calling for "statehood" for the fictitious "people's republics" of eastern Ukraine?
Russians know that their "president" is now a runaway train, and that the result is likely to look Ugly.
Unless the central bank gets really aggressive buying rubles, the rate could soon break 37.5 / USD. History is made before our eyes.
I beg your pardon, for misleading you about drains on Russia's foreign currency reserves in my comments above.
In fact, Russia has decided to let the ruble float -- that is, Russia has abandoned its previous policies of ruble support.
Probably a major reason for the new policy, is to protect the foreign currency reserves from the erosion that would inevitably result if Russia kept supporting the ruble. Instead of drawing on these reserves to protect the ruble, Russia is "banking them up" from petroleum sales. Moscow understands that it may be heavily dependent on these reserves in the growing conflict with the West.
The details of ruble policies are a little more complicated. I keep quoting the RUB/USD rate, but Russia's central bank monitors the ruble via a "bi-currency" rate that takes into account both dollars and euros, weighted slightly more to dollars (55% USD + 45% EUR). Present Russian central bank policy allows a very broad margin for the ruble against this rate, of 35.4 to 44.4 (this bi-currency rate stands at 42.5 as of this writing). If the ruble hits the limit, which might happen soon, the central bank may buy rubles using its foreign reserves, but in accordance with the new policy these purchases will be relatively small and infrequent.
This means that the ruble could pass 39 / USD before Russia's central bank does anything about it.
When I think about the last few years,,,, it is hard to comprehend how utterly wrong and out of touch with reality both Putin and Obama consistently are. They are both the wrong men to be on the "Red Phones" to stave off disaster . The world in is chaos and neither has a clue as to how foolish each is.
Im sorry but putin is very much .... Bla bla bla whats the point you winge an moan about ukraine . Its nothing to compared to these muslim morons . You best hurry up and find a girl and forget about ukraine and putin you moaning wont change sweet f all
At this moment, the ruble is at 38.08 / USD, a tiny recovery from its new all-time record of 38.09, set a few minutes ago.
For those interested in this strange drama, remember that 39 (more or less) is the threshold at which Russia's central banking system is supposed to step in, using its foreign currency reserves to buy rubles.
I don't know whether it will go that far, but if things keep up like the past couple of days, it wouldn't take long to get there.