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RE: Is Russia's economy ready for sanctions?
It's me again
I was wondering if you have any view on futute of Russia financial system (especially from the perpective or regular people) after interest rates has been hiked to 20%?
I can hardly imagine being able to pay any loans or morgage in similar situation. Especially while knowing, that all imported items will cost so much more since value of Rubel dropped so badly.
Any thoughts you like to sharE?
Cheers, Piotr
I think people will face hardships. However, is this the first time that Russian banks have had to deal with sanctions?
Look at the USD RUB chart (above) from 2014. How much did the Ruble depreciate versus the dollar? Is the depreciation still the same?
Base rates do not imply that my loan rates became 20% more expensive. Below is 10 year Russian govt bond
Russian citizens have seen 14% interest rates twice before in the last 20 years. Also, I think in loans one has 2 options - increased installment or increased tenor. At 14% what will people choose to do? Increase the tenor of the loan. 5 years later, when things are back to normal, tenor comes back down.