Five charts to start your day

The Russian rouble is on fire, but not in the positive sense

Putin's unbroken leadership since 1999 marks him as the country's most enduring figure since Stalin, amidst growing international isolation. The Russian economy, particularly the rouble, has experienced volatility, especially after the Ukraine invasion, challenging the country's financial stability.

Despite appearances of a stable GDP, bolstered by military production, the true state of Russia's economy remains obscured by both deliberate policy and the chaos of current events, reflecting a complex blend of resilience and vulnerability.

Early on during the war, the central bank had to intervene aggressively to shore up the rouble, which was sharply devalued under free market conditions. Rigid capital control, restrictions on currency movements and other extreme measure then led to a sharp rally.

But make no mistake, this wasn’t demand driven revival of the rouble. The supply of the rouble had just been heavily restricted to bolster the rouble’s valuation, coupled with an insistence that trade in Russia should be conducted in roubles, including purchasing gas. In short, the Russian administration had created an artificial (fake) market for their currency.

It was never sustainable though. Now the Russian rouble has once again lost ground despite state support. The story told below in this chart from chartr tells it well. It’s very hard to take Russia seriously anymore. The very minor rally after the label “Putin doubles down on capital controls” shows that this strategy of Tom foolery as run its course.

Source: chartr

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