I don’t get why the ruble is back to its pre-war level. I don’t necessarily think it matters but I’m just confused because presumably a lot of foreign buyers of Russian goods and services who would bid up the ruble’s price are now cut off.
ELI5 please
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My best guess is it’s arbitrage. The ruble was always backed by oil and commodities. Initial shock reduced demand for these due to sanctions. But market expects foreign buyers (China india etc) to do sanctions arbitrage or just shift demand to their commodities
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This is what I thought!! But now I conveniently cannot find the post where I talked about it!!
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I’m abusing the term arbitrage here I think. But it’s close enough. “Sanctions arb” seems correct.
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It just inevitably makes sense to me that the effect of sanctions will be to redirect commodity flows but not necessarily the delivery of commodities themselves
Where India might have been 50/50 russian/west for oil, they might now be 90/10, but Western sellers who lose...
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...are now selling more to the west which has sworn off Russian oil
So the end effect is that prices and quantities stay roughly the same and delivery addresses change. Which doesn't seem like a big deal.
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I think this levels more, too, at least long term- but doesn’t this assume the consumption levels offset fully and the producers that there’s no lagtime in redirecting supply chains?
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Sure there's momentary pain but unless nord stream stops shipping I think it's mostly tankers that can sail anywhere, right?
Oh totally! I should’ve been clearer: I’m assuming that it’s the handoffs from tankers to gas stations that take time to coordinate: pipelines, truckers etc seem like they wouldn’t be a super liquid market but I could be wrong. It might only be a month, but a month is a long time
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Also, maritime routes are likely planned at least months in advance. It may be doable faster, but getting a full crew fast can be unreliable
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