As Martin has faithfully documented here, the ruble tumbled dramatically Monday morning, in what looked like a panic sell-off.
I've been puzzling over this, because crude oil prices have (for now, at least) stopped their steep decline, with Russia's Urals benchmark crude appearing to stabilize a little below $85/bbl. I would expect this to calm the ruble decline as well.
As far as I can make out, today's ruble selling was powered by (1) a speech Putin gave on Friday, in which he blamed the West (especially the US) for "blackmailing" Russia; and (2) Sunday's parliamentary election in Ukraine, which resulted in a strong victory for parties wanting Ukraine to unify with the real Europe.
From my perspective today:
A. Putin has won the battle by destroying Ukraine's sovereignty over its own territory (perhaps for decades to come, if not permanently). Ukraine surrendered in the transition days from August to September, and Poroshenko will not use Ukraine's military no matter how strongly provoked. Ukraine's military campaign is over, probably forever.
Putin has graciously responded to Ukraine's surrender by continued economic bullying and armed slaughter.
B. Putin has lost the war by ensuring that Ukraine will never become part of his economic bloc. The entire purpose of Putin's whole unlawful war of military aggression was to keep Ukraine from joining the West -- all the nonsense about the strategic necessity of Crimean naval bases, and the threat of NATO, were and are hogwash. The Ukrainian people decided that they wanted to choose the direction of their own country, and real democracy is against everything Putin stands for.
NATO would never, under any circumstances, invade Russia. But if a country made up of Russians and their closest cousins becomes a true democracy, and those people eventually enjoy better lives than in Russia -- for Putin, that is a dagger aimed at the heart of his tyrannical rule.
Just perhaps, then, today's ruble panic reflects a recognition by Russians that their Fearless Leader actually has lost his war ... and that now, in desperation, he may pull some more reckless and destructive stunts.
The Argentinian peso is one of the world's most battered currencies at present, Argentina having gone into default on sovereign debt. Since the start of 2014, the Argentinian peso has lost 30.4% on the USD.
Since the start of 2014, the ruble has now lost 29.4% on the USD.
Lonely, those Russian wheelbarrow factories had better ramp up production ... oh wait, they can't borrow from foreign banks ...
A magazine writer went to Russia a few weeks ago on a "PR tour" (expenses paid by Putin). In the Moscow metro, a drunk guy (who knew, there are drunks in Russia!) heard her speaking English with a colleague, and threatened to punch them out -- if they were Americans (which they are).
Her colleague speaks Russian, and told the drunk that the two of them were Serbians on holiday in Moscow. That made the Russian guy happy.
Back in the 90's I lived and worked in the Belgian seaport town of Ostend which, being a seaport, attracted the British coming in on their 'booze cruise' ferries, behaving badly whilst drunk before returning back to UK ... accordingly the British weren't very popular in Ostend whilst it became more complicated because I couldn't admit to working there because I wasn't paying any tax or social security.
One evening out with a Swedish workmate some locals overheard us speaking English and, in a threatening manner, came towards us questioning if we were English/British. A few years previously I had occupied some 5 months living and working in Australia and I'd actually returned home with an Australian accent so when these guys questioned I just replied in my Australian drawl "No mate, I'm from Australia and my friend here is from Sweden" ... Problem solved :)
New all-time record: 42.74 RUB / USD
And on the pedestal these words appear:
'My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!'
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.