The World Blog by humble servant.

The Ukrainian government will take “painful” measures if the military conflict in the country lasts another three or four months, according to the country’s Finance Minister Serhiy Marchenko. He said that the drastic steps may include a sharp increase of taxes, spending cuts as well as nationalization. “What in recent years has become a fairly market-driven and free-wheeling economy could face a wave of nationalization that will undo years of hard progress,” Marchenko said in an interview with The Economist. The minister cited the latest forecast revealed by the World Bank that expects the Ukrainian economy to shrink by 45% in 2022. According to Marchenko, customs revenue fell by about a quarter due to a reduction in imports and the dropping of many duties. He highlighted that the salaries of the military is “a huge burden,” adding the country’s monthly losses amount up to $5 billion due to the current situation. The conflict also poses significant challenges for exporting wheat,...

Strong Dollar: An Overview A strong U.S. dollar has several advantages and disadvantages. It benefits some but negatively impacts others. The dollar is considered strong when it rises in value against other currencies in the foreign exchange market. A strengthening U.S. dollar means it can buy more of a foreign currency than before. For example, a strong dollar benefits Americans traveling overseas but puts foreign tourists visiting the U.S. at a disadvantage. The Invesco DB U.S. Dollar Index Bullish Fund (UUP) was up nearly 4% for the year at the end of 2019. This exchange traded fund tracks an index that represents the value of a dollar compared to its exchange rate versus a basket of important foreign currencies, including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc.1 KEY TAKEAWAYS A strong dollar is good for some and relatively bad for others. With the dollar strengthening over the past year, American consumers have benefited from che...

The Russian ruble is edging towards a five-year high against the euro on Monday, demonstrating unprecedented resilience amid the most drastic sanctions ever imposed on Moscow by the West. The ruble was named the world's best-performing currency by Bloomberg last week. The ruble strengthened by over 1% to trade just above 65 rubles to the euro, getting close to its strongest position since June 2017. The Russian currency made similar gains against the US dollar, trading above 63 rubles per dollar, hovering near its strongest exchange rate against the greenback since February 2020. The ruble dropped to historic lows of over 120 to the dollar and 130 to the euro amid the first wave of Ukraine-related sanctions in early March, but has since nearly doubled in value. The latest appreciation comes amid a series of support measures for the currency introduced by the Russian government. In addition to temporary capital controls, the Russian Ministry of Finance has obliged Russian expor...

German Chancellor Olaf Scholz’s Social Democrats suffered a setback in a traditional heartland on Sunday as the party claimed an historically low percentage of the vote. The Greens, their partners in the national coalition, almost tripled their own support in North Rhine-Westphalia (NRW) and are now poised to play kingmaker in forming the federal state’s next government. NRW is the most populous region in Germany, with 13 million registered voters, and is a political and economic powerhouse. Sunday’s contest was held six months after the national poll that brought Scholz to power. The regional vote was considered a ‘mini-federal election’ serving as a bellwether for the state of the nation. Scholz personally campaigned on behalf of Thomas Kutschaty, the leading candidate from his Social Democratic Party (SPD), further turning it into a symbolic referendum on his policies. The projected results indicate a huge loss for the SPD, which won just 27% of the vote, down from 31.2% in 2017...

The European Commission has reportedly agreed on a plan that would allow companies to keep buying Russian gas without violating sanctions imposed on Moscow over its military attack on Ukraine. Bloomberg reported on Saturday – citing sources said to be familiar with the results of a private meeting of the EU executive branch – that the new guidance will require companies to clearly state that they consider their obligations fulfilled once payment in euros or in dollars is complete. At the same time, the proposal does not prevent the companies from opening euro or dollar accounts in Gazprombank, as Moscow has requested. In March, Russian President Vladimir Putin demanded that 'unfriendly' countries pay for Russian gas in rubles. To comply, they are requested to open accounts at Gazprombank and make payments in euros or dollars that would then be converted into Russia's own currency. Putin also warned that failure to comply with the new system would mean that affected cou...