“Mutiny Aftermath Jolts Ruble as $43.5 Billion Outflow Takes Toll”
“The ruble has crashed through what a top government official recently called Russia’s “comfort” zone after a mutiny that briefly threatened President Vladimir Putin’s power compounded months of capital outflows.
Russia’s currency weakened on Wednesday to trade close to 91 per dollar after depreciating almost 2% to levels last seen a month after the invasion of Ukraine in February 2022.
It’s among the worst performers in emerging markets this year with a loss of about 18%. Last month, First Deputy Prime Minister Andrey Belousov described a range of 80-90 per dollar as “optimal” for the Russian economy.
The ruble’s descent is a stark reminder of the challenges facing Russia as it adapts to sweeping international sanctions at a time when political risks are on the rise and the government’s coffers are under stress from a decline in energy earnings.
And just as a recovery in imports drives up demand for hard currency at home, Russian households and businesses are seeking out safety by shifting money outside the country. The stock of retail deposits held abroad increased by $43.5 billion from early 2022 until May 2023, according to Bloomberg Economics.”
“Mutiny Aftermath Jolts Ruble“
Makes sense that that political risk is what triggered the recent slide in the ruble.
“$43.5 Billion Outflow Takes Toll”
But the underlying fundamentals continue to deteriorate as well. Russia still seems on track for financial crisis.
Like how it was described in The Great Gatsby, when a character was asked how he went bankrupt - slowly for a long time, and then all of a sudden.
Best guess is that sometime next year will be their financial “Come to Jesus” moment, but markets will see it coming ahead of time (already do).