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Why falling ruble against dollar doesn't change Russia economy

Superboy

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Ruble to dollar is begged to oil price. Oil price dropped so dollar to ruble grew. Russia sells oil on the international market in dollar, but Russia uses ruble. If oil price halves, then dollar to ruble is twice as high. So ruble Russia earns from selling oil is multiplied by 0.5 * 2 = 1. Therefore, Russia economy does not change.
 
So what happens when the oil price in dollars falls?
 
Ruble to dollar is begged to oil price. Oil price dropped so dollar to ruble grew. Russia sells oil on the international market in dollar, but Russia uses ruble. If oil price halves, then dollar to ruble is twice as high. So ruble Russia earns from selling oil is multiplied by 0.5 * 2 = 1. Therefore, Russia economy does not change.

Thank you for your insight.
 
So what happens when the oil price in dollars falls?


Russia earns less dollars selling oil on the international market. At the same time, dollar to ruble grows and so Russia earns the same number of rubles for each barrel of oil sold on the international market. Economy of Russia is measured in rubles.
 
Russia earns less dollars selling oil on the international market. At the same time, dollar to ruble grows and so Russia earns the same number of rubles for each barrel of oil sold on the international market. Economy of Russia is measured in rubles.

Brilliant analysis! I am impressed.
 
Dollar price of oil is pegged to supply and demand of oil. That's why changes in supply and demand of oil changes dollar price of oil. Ruble price of oil is not pegged to supply and demand of oil. That's why changes in supply and demand of oil does not change ruble price of oil and therefore does not change Russia GDP which is measured in ruble not in dollar.

Russia and Saudi Arabia increase supply of oil to decrease dollar price of oil and hurt the US shale oil industry whose income is measured in dollars.
 
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As the $ price of oil decreases to 0, the dollar to ruble exchange rate increases to ∞.

Therefore, if oil is free, that is, the $ price of oil is 0, then dollar to ruble exchange computer goes into an infinite loop and explodes and Communism arrives :p:
 
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