The Russian rouble has fallen to record lows against the dollar as the US, Europe and Japan prepare to launch a fresh raft of financial sanctions within days unless the Kremlin pulls its troops and heavy armour out of eastern Ukraine.
The currency has dropped 25pc over the past 18 months, raising the real cost of servicing almost $610bn (£369bn) of foreign currency debt owed by Russian banks, companies and state bodies. Fresh capital flight pushed the rouble to 37.46 against the dollar on Tuesday, a level that may soon force the central bank to raise rates, driving the economy deeper into a protracted slump.
Data from Sberbank showed that net “short” positions held by speculators on the derivatives markets have reached an all-time high and are significantly more stretched than during the first wave of the crisis in March and April. Traders warn that a serious liquidity crunch is taking hold in Russian financial markets, even if this is not yet reflected on the Moscow bourse, where a strange calm still prevails.
“People are very scared,” said one Moscow banker. “There is talk of Iran-style sanctions against Russia and, if we go down that route, we may not have much of a financial sector left.”
The political mood has hardened in Europe after Russian president Vladimir Putin began talking over the weekend of an independent state in eastern Ukraine, with even Austria abandoning its softly-softly approach.
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