Global markets appear to have collectively decided that the sharp decline in oil prices will likely persist for an extended period of time, causing severe harm to Russia’s hard currency cash flow, reserves structure and repayment capabilities. At one point yesterday, the ruble experienced a 6.5% dive to a record low against the dollar of 53.86, before an anemic recovery of some ground via Russian Central Bank intervention. Although Moscow argues that its fiscal budget is predicated on $80 per barrel oil, Western estimates range from $90 to $105 (at this writing, oil is about $72 per barrel).
Russia’s external debt is estimated to be $614 billion, with $31 billion due this month and another $98 billion maturing in 2015. This is very bad news for Russian banks and companies holding substantial foreign debt. Already, Russian banks are starting to impose strict limits on the sale of dollars to customers, a trend that could ultimately lead to some level of public panic and even harsher market judgements.