Despite the Russian Central Banks best efforts to stem the flow we continue to see Ruble weakness. As does the slide in the oil price continue. The question we need to be considering is what effect will this Ruble weakness have on other emerging market currencies, does this lead to panic and contagion. Clearly this should be the start to serious inflation in Russia, not to mention the effect of sanctions from the west. I don’t know enough about the countries financial situation to comment too much. Does it have foreign debt? I don’t know and too lazy to look it up. I have always found Putin to be a dangerous megalomaniac so I wonder if this backs him into a corner or does an aggressive stance against Ukraine and the west help him in any way. Bottom line is no matter which way you spin it from a tactical point of view, unless they can export more with the lower currency their economy is in Sh1t. It doesn’t help when your main export product is falling like a stone.
The important thing to note, is that the Russian psyche is accustomed to hardship and they will not simply shrink away. Furthermore they love Putin, so with that combination Russia is not going to simply fade away quietly. This is all shaping up to be a fascinating story. Personally I am afraid of people like Putin when his back is against the wall.
Did the homework I was meant to do earlier, surprisingly Russia has only 5.1% unemployment. Its government debt to GDP is a tiny 13.41% and runs a current account surplus. The economy has slowed and its external USD borrowings have grown so this story has a long way to still run.