Running From the Ruble

It probably still needs to fall another 10 .

The government was also too slow in depreciating the ruble.

The currency was introduced in May 1992, replacing the Soviet ruble.

Lukashenko may have to adopt the Russian ruble, at least as a reserve currency.

Growth is endangered, the ruble is weak, and the government budget is in deficit.

Gold and foreign currency reserves are increasing, implying appreciation of the ruble.

In a little more than a year, the Asian financial crisis became a global financial crisis, with the crash of Russia s ruble and Brazil s real.

The central bank buys less foreign currency, and thus issues fewer rubles, reducing inflation.

In the meantime, the central bank hemorrhaged reserves defending this slow correction, while commercial banks have been holding on to dollars in anticipation of the ruble s further decline.

The other affected everyone but was less severe Russia s 1998 default, which saw a fourfold devaluation of the ruble.

Indeed, at the onset of the financial crisis, Putin tried to bestride the world, portraying Russia as an island of stability and demanding the creation of a new global financial order, with the rouble to become one of the world s reserve currencies.

Yes, Russia has enormous gold and currency reserves, but they are being depleted fast. They will not last for long while being spent mostly in defense of the ruble at the current pace.

Many borrowers, unable to get funding on reasonable terms domestically, were forced to take hard currency loans from abroad, creating disastrous burdens when the ruble collapsed.

The Central Bank of Russia (CBR) responded to collapsing oil prices by floating the ruble, which immediately lost half its value. Desperate Russians rushed to buy whatever they could before their money became worthless.

Russia and East European countries on the periphery of the euro were tied much more to the euro but when the Russian market collapsed, the effect on the dollar was the same, because the Russian central bank had overbought euros and had to sell them to defend the ruble.