If Russia is Being Sanctioned, Why is The Rouble the Best Performing Currency?

I listened to Western Political Leaders wax lyrical about the fall of the Russian Rouble towards the end of February.

The sanctions and measures they were taking made me think that the carnage on the Russian economy would be swift and long lasting, oh boy was I wrong, and from what I can tell so far the Rouble has surprised many financial and geopolitical economists too.

In the reports and articles I have been reading, they didn’t spell it out in as many words but reading between the lines; the surprise was clearly apparent.

I recall that two weeks prior to the Russian invasion of the Ukraine that Xi and Putin had some talks, Xi Jinping hosted Putin, and they reportedly had ‘common views’. These common views no doubt would be to curb the power and influence of the West.

Also Putin met with Modi of India in December 2021, and they have what they refer to as a ‘special relationship’.

Retrospect is 2020 vision as they say, so the above ties into what I am speculating about further in this article.

We all hate war and I am sure we all hate tyranny. Now we have a leader who likes to poison his political opponents and has grand designs on a large Soviet Union, wanting to subjugate other nations. Such leaders force the hands of nations and war is necessary, and a part of war is economic, always has been, and always will be.

Economic hardship is what can cause unrest in a country and create upheaval and change leaders, when the economic hardship drives the people to revolt.

I hate that the people have to suffer in the process but as we know, ‘all is fair in love and war,’ so in effect nothing is fair, and we all know that life is not fair. I you think life is fair, you have either been extremely lucky or sheltered.

We watched the Rouble in free fall and we wondered just how long Russia could endure such a drop in their currency. Once the buying power of your currency drops like that, imported inflation becomes a nightmare, not because the goods being imported are so expensive, but because the devaluation of your own currency sends local prices sky rocketing into the stratosphere.

So how did the Russian Rouble remain so strong given all the measures taken against Russia?

I am speculating now but Putin, together with Xi, and possibly Modi, maybe propping that Rouble up, by creating a demand for Roubles (through energy and commodity sales to India and China)

There are reports that Putin is not allowing exchange of Roubles for other currencies within Russia. Couple this with Putin requesting payment from the European Union for Russian energy exports in Roubles and I think the picture gets a little more clear on why the Rouble is strong.

Is this a false strength? Are we going to see the Rouble collapse? Or is there a parallel economy that countries such as Iran, Russia, India and China, maybe even Brazil and South Africa are running?

Reports I have read also claim that the Russian economy is facing 24% inflation, but if the Rouble continues to strengthen as it is currently then this surely would counter that high inflation and secure a more stable domestic economy?

Putin certainly has been beating his chest about the revitalized Rouble, and because this is such a visible economic indicator, he is snubbing his nose at the West.

Should Western European countries not have strategically planned a withdrawal from Russin energy and commodities prior to sanctions being instituted on Russia? I would think this would be Geopolitical strategy 101, but hey what do I know? I’m no politician.

It just makes no sense to me that when you identify your enemy that you then fund their war machine? Am I smoking some ‘wacky tabaccy’ or do you agree with my reasoning?

Russia never has been a pushover and are even less of a pushover in 2022. We have to all remember that Russia was instrumental in the defeat of Nazi Germany in WW2. And reports I have read tell of how the Russian Army faced the major onslaught of the German army, more so than the western front. Yes, I also understand that the Russian winter helped against the Germans, but that in and of itself, the harsh winters and weather that Russians endure makes for a very tough people.

Growing up, I knew nothing of the Russian Eastern front conflict in WW2; they taught us that Britain and the USA had liberated the world from the Germans, but Russia too played a big part. We always need to remember this, and in my humble opinion, western political leaders would do well to remember the history. And understand the nature of the beast they are dealing with.

All of this get’s me to question. Are we seeing a global power shift where the large Eastern nations are flexing their own economic muscles? Let’s face it in sheer size of market potential, they certainly have muscles to flex.

Has the West become complacent, soft and bloated? I do not have the answers to these questions, and I don’t think anyone has, we will have to wait and see how this all plays out.

Let me know your thoughts?