© putnik/Aleksey Sukhorukov
While low prices for 'black gold' keep shaking the world's economies, and major oil-exporting nations are trying to weather the trend, the
Russian national currency has proven it still has an ace up its sleeve.The collapse of oil prices at the start of March, after Russia withdrew from the OPEC+ deal, was a disaster for Moscow which remains heavily reliant on oil exports to fund the budget.
But then an odd thing happened:
the price of oil lost 56 percent of its value in the year-to-date, as of May 7,
but the ruble is down by only 19 percent over the same period. Like some Tibetan monetary monk, the ruble's value has managed to levitate and stay up, even as the oil-price ground fell away from underneath it.
The ruble's value has long been tied to the price of oil and the two used to move in lockstep. That changed when the Russian Ministry of Finance introduced the so-called
budget rule (aka the financial rule), which automatically siphons off any excess oil-export revenue to the National Welfare Fund (NWF) for all revenues earned from oil prices over US$42.That rule led to the buildup of the reserve fund, which held 12 trillion rubles, or 11 percent of GDP as of April 1, and helped bring down inflation to post-Soviet lows, but, most importantly,
largely broke the tie between the ruble's value and the price of oil.
Comment: Fauci better be cautious of showing his face outside the Democrat DC cocoon.