The Ruble Is the Best Performing Currency of 2022 Ahead of the USD, but This Is of No Use to Russia.

The hardest part is yet to come for Vladimir Putin's Russia.

A little more than one hundred and twenty days after the beginning of the war in Ukraine, European countries have continued to reduce their oil purchases from Russia. However, Russia has hardly felt the effects. The reason is to be found in India and China.

Chinese imports of Russian oil increased by 28% in May 2022 compared to April 2022. India, which until recently imported virtually no Russian oil, received an average of 760,000 barrels per day that month, according to a data analysis by Kpler.

Western financial sanctions, imposed after the invasion of Ukraine in late February 2022, have made it much more difficult and expensive to secure an oil shipment during its journey. As a result, Chinese and Indian buyers are charging Russia a significant discount to cover costs and risks. Russian crude oil sells for about $30 per barrel less than a barrel of Brent crude, as North Sea oil is known, which is the market benchmark.

Between March and May 2022, the number of barrels of crude shipped from Russia to Europe decreased by some 554,000 per day, even though European sanctions on Russian oil did not take effect until early June 2022.

Untraceable origin of oil that could return to Europe once transformed ...

Refineries in India and China absorbed an additional 503,000 barrels per day during the period, limiting the loss to Russia. If China's economy recovers from the coronavirus pandemic, an additional one million barrels could be added each day, experts at investment bank JP Morgan estimate.

Once Asian refiners turn crude oil into diesel, for example, the origin of the raw material can no longer be traced. This means they can profit twice, writes the New York Times. On the one hand, thanks to the cheaper oil, on the other hand, thanks to the possibility of exporting the processed version to Europe for example ...

Due to exports to Asia, Russia's turnover from oil increased by 1.7 billion dollars in May 2022 compared to April 2022. And this is what makes the Russian currency, the ruble, currently the best performing currency in the world.

The rally of the ruble is a source of pride for Vladimir Putin, as his national currency is the best performing in the world in 2022 ahead of the US dollar. Even though all the experts keep repeating that the strength of the ruble is purely artificial.

A strong ruble is of no use to Russia

After the invasion of Ukraine, the exchange rate of the ruble collapsed. At its lowest point, 1 US dollar cost more than 140 rubles. In the meantime, the currency has recovered and the exchange rate is again similar to that of 2015: 53 rubles to the dollar.

However, Russians can't take advantage of this. You read that correctly. This strong ruble is of no use to Russia. All this is artificial and we can say that the high rate is the result of the good behavior of the president of the Russian central bank. But Western companies are leaving, exports to Russia have stopped, and there are stronger and stronger sanctions.

If Russia still has enough money, it can no longer spend it, which will be problematic in the coming months when Russian companies run out of parts, for example. This is when the Russian economy will collapse much more strongly. Probably from Q4 2022.

In the meantime, the Ukrainians have to stand their ground and the Westerners have to continue to support in a massive way the resistance of the country presided by Zelensky against a Russian invader who will sooner or later not be able to finance this odious war.

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