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Comment by AnotherGoodName | Hacker News Reader

Looks like their foreign exchange reserves are dropping though.

https://tradingeconomics.com/russia/foreign-exchange-reserve...

So not sustainable. They are selling foreign currencies to keep the ruble alive.

It's not sustainable in the long term, but that term is actually quite long. This isn't going to be a short or medium term crisis. It's going to take years, and a lot of consistent political will. I hope we're up to it.

> It's not sustainable in the long term, but that term is actually quite long.

I'm not so sure about that. There were a bunch of news outlets warning that Gazprom is on the brink of a massive default. Gazprom, of all companies.

If the company that subsidizes Russia's ruling regime can't make their payments in spite of sitting on a huge pile of oil and gas, that does not bode well for Russia's economy.

That bunch of news outlets was/is feeding their clients bullshit

Can share some sources for this? Genuinely curious.

A default that is only due to sanctions preventing repayment of debts isn't really a meaningful default.

In some ways yes, but in practical terms it means they’re locked out of the credit markets and are going to have huge difficulty paying international suppliers. Even the ones willing to deal with them despite sanctions.

Why isn't that already reflected in the price? Surely FX traders (who are mostly very large institutional investors) have already factored this into their models since it seems a very important factor?

It is an important factor, just not yet.

Why the assumption that it’s not reflected in the price?

That's what they meant. Read the second sentence of the comment.

RUB is a tiny market in FX and probably not many touching it due to current risk surface. Very large institutional investors are usually not big FX speculators anyway outside of exposure from their assets. FX tends to be a bit more fast money.

Russia still has 2301.64 Tonnes of gold:

https://tradingeconomics.com/russia/gold-reserves

Or roughly $128.9 billion USD in gold reserves:

https://www.wolframalpha.com/input?i=2301.64+Tonnes+of+gold+...

But how many bitcoin and stable coins do they have?

Russians, not Russia, according to this article from early Feb-2022 have $214 billion in crypto assets based on IP address analysis:

https://m.timesofindia.com/business/cryptocurrency/blockchai...

What’s Russia going to do with that gold? Put it on a train a quarter of the way around the world to Beijing?

It is far from trivial to move that kind of stock.

Correct, though there is a huge demand for gold currently. Russia was buying 150 tonnes a year from 2008-2020; annual global demand is 4,000 metric tons. Even without selling it or shipping it, they could likely use it to secure debts to China example.

Is the Euro or the Yen sustainable at this point? BOJ has a standing policy to buy unlimited JGBs. How sustainable is that?

JGBs being owned mostly domestically, that particular country's currency is probably not at risk unless big japanese institutions decide to close shop and retire abroad.

As for the Euro, it's currently at a 20-year low, if that's an answer to you. Since the balance of payment is positive, there's probably no reason to be pessimistic in the long term.

> As for the Euro, it's currently at a 20-year low

The Yen is at a 24 year low vs USD. The Yen is down 15.9% YTD. That is just an incredibly fast erosion and we're only halfway through the year.

> we're only halfway through the year.

Is there a yearly pendulum that I'm not aware of? Because if not, we've also only 21% through the century, and we've barely scratched the millenium.

How does this compare to foreign exchange reserves of other countries like the US & China?

Don't think of the US as having foreign exchange reserves. Other countries have foreign exchange reserves, basically all in US dollar-denominated instruments.

This is misleading if not outright wrong [1][2]. The United States absolutely has foreign reserves, and nearly all countries hold foreign reserves that aren’t solely “basically all in US denominated instruments”. Nor can one just wish away the fact that the USD isn’t the only strong currency in the world, nor the only asset foreign countries hold; diversification doesn’t only apply to individuals.

1. https://www.federalreserve.gov/data/intlsumm/current.htm

2. https://home.treasury.gov/data/us-international-reserve-posi...

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