Russia's currency is taking another nosedive in early trading,
hitting new record-lows against the dollar and the euro.
Falling oil prices have compounded fears about the country's
economy causing foreign currency to flood out of the
country. The problem now is that the falling value of the
rouble is itself causing problems for Russian companies,
driving up import costs, squeezing profits and making foreign
currency debt repayments hugely more expensive.
In short, Russia faces a death spiral of a falling rouble feeding
fears of an economic collapse, which drive the rouble down
further.
The currency continued its slide despite the Central Bank of
Russia announcing a more aggressive plan to prop up the
currency. On Wednesday, the Bank announced that it would
buy roubles from the market "with the intensity equal to $350
million per day" if it falls below a level that the central bank
is comfortable with. But the news failed to stop further falls
with the currency heading towards 45 roubles to the dollar.
More interestingly, the statement suggests that the central
bank is looking to remove its unlimited support of the rouble
because it has benefited "speculative strategies against the
rouble". The implication is that currency traders had been
profiting from the bank's scheme to protect the currency by
shorting the rouble to the levels previously set out by the
bank.
Now, with all eyes on the rouble, the claim that the exchange
rate will be determined "predominantly by market factors" —
effectively free-floating — is likely to be treated with
scepticism.
This is what happen when you mess with america.

Russia may yet experience another currency crises similar to 2008 again! - Propaganda won't help this time as it will be hard to blame imaginary fascists for economic collapse!