Sanctions against Russia are not working as planned, and now we find out that Sberbank is actually overflowing with dollars instead of being desperately low on them. It has more dollars than it knows what to do with. In a bid to curtail the inflow of dollars it has cut rates on short-term dollar deposits to almost zero.
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“We’re not yet mentally prepared for sub-zero rates but they might be cut to several hundredths of 1 percent this year,” Morozov its CFO stated . “When the sanctions were imposed, our expectations were different. Without access to capital markets and given capital outflow, we anticipated a foreign-currency liquidity deficit.”
Banks’ coffers are overflowing with dollars as Russia endures its second year of recession, pushing companies and individuals to save more, while the ruble’s volatility remains near the world’s highest. At the same time, the regulator has tightened rules to create disincentives for lending in foreign currency. Sberbank is enjoying a surplus of dollars even as U.S. sanctions over the conflict in Ukraine have kept it from raising money on international markets since 2014.Full Story
Now who would have thought this would be possible; the secret to this is that the Russians are directing all their companies to wean themselves of the dollar. For the dollar, this is bad news in the long run. Russian has teamed up with China now, and they are unbeatable. Russia has the Guns and China the money, he who controls the guns and the money controls everything. China is also following a similar policy, don’t be surprised if you start to see China and Russia’s dollar reserves drop dramatically in the years to come. While the press will create stories about how bad things must be for these two countries; the truth is that things will be improving as they will be divesting out of the dollar and setting the bedrock for a new reserve currency.
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