Putin and Ruble on Life Support

Ruble Drop Sparks Broader Russian Worry

For most of the year as Russian President Vladimir Putin has ratcheted up the conflict with the West, the economic fallout has had a limited impact on ordinary Russians.

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But suddenly the plunging ruble, driven by sanctions and dropping oil prices, is reawakening fears of the kind of financial crises Mr. Putin has sought to put behind his country. Long lines for big ticket items such as electronics and cars, emptied-out ATMs and reports of people trading in big stacks of cash for dollars attest to a new feeling of vulnerability in Russia and rumblings of panic about rising prices.

The battered currency plunged 20% against the dollar on Tuesday to a record low, despite the Russian central bank’s surprise overnight move to ratchet up interest rates to 17%.

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Russia Moves to Help Lift Sinking Ruble

A spiraling currency crisis, fueled by the bite of Western sanctions and the plummeting price of oil, spurred Russia’s central bank to raise interest rates late Monday, a drastic move aimed at shoring up the collapsing ruble.

The surprise action came at the end of a turbulent day for global financial markets. Currencies and stock markets from several developing nations were buffeted by the deepening oil-price slump and worries about future interest-rate increases in the U.S.

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The epicenter of the troubles was Russia, where the ruble plunged to a record low in its biggest one-day decline since 1999.

The ruble’s fall, described by analysts as “staggering” and “extreme,” prompted Russia’s central bank to hike a key interest rate by 6.5 percentage points, to 17%, after New York’s trading day had ended. One dollar now buys more than 65 rubles, compared with 33 rubles at the start of the year.

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