China, Russia Sign CNY150 Billion Local-Currency Swap As Plunging Oil Prices Sting Putin | WHAT REALLY HAPPENED

China, Russia Sign CNY150 Billion Local-Currency Swap As Plunging Oil Prices Sting Putin

One place where Russia has been hit the hardest as a result of tumbling oil prices, is the crashing currency, with the Ruble hitting new record lows against the USD on a daily basis. In fact, as Bloomberg reports, Russia has been forced to spend a whopping $6 billion in just the past 10 days to slow down the tumble of the RUB.

Russia’s central bank intervened in the past 10 days to stabilize the ruble, central bank Governor Elvira Nabiullina told lawmakers in Moscow today. The action, which comes as President Vladimir Putin orders a withdrawal of Russian forces from Ukraine’s border, has so far failed to halt the ruble’s decline amid a domestic foreign currency shortage stemming from sanctions. The cost of swapping rubles into dollars widened to a record.

“The main driver for the ruble right now is the oil price,” Dmitry Polevoy, the chief economist for Russia at ING Groep NV, said in e-an e-mailed note. Crude’s decline “totally eclipses” the “reassuring news” that Russia announced it was pulling back forces from Ukraine’s borders, he said.

To be sure, the traditional read through of this news is quite negative for the economy of yet another country which is reliant on the petrodollar. On the other hand, another take is that the collusion between the US, Europe and now Saudi Arabia will merely force Russia to accelerate its bilateral ties with China, in everything from trade to capital flows. Indeed, that is precisely what is happening. As RIA reported over the weekend, China is ready to export agricultural products and oil and gas equipment to Russia, China’s Vice Premier Wang Yang stated Saturday. Products, for which Russia could pay in either Rubles or Renminbi, thereby accelerating the de-dollarization of bilateral commercial relations.