Yes, there are still a few weeks left in the year, but so far the leading candidate for 2014’s biggest currency loser among major economies looks to be taken by the Russian ruble, which has fallen by nearly 40% over the course of the year, with 15% of that depreciation coming in the last two weeks. 

The ruble’s slide should not surprise anyone, as Russia has been hit both by sanctions imposed by the U.S. and Europe after its actions toward Ukraine, as well as a collapse in energy prices. Russia’s economic woes were underscored this week with the release of data showing a key gauge of business activity at its lowest point since May 2009 and a forecast by Russia’s Economic Ministry of a 0.8% decline in gross domestic product in 2015.

The collapse of energy prices accelerated last week when OPEC refused to cut production.  The cut had been expected by many in the markets given that oil prices have fallen 36% from June highs.  Brent crude is at lows not seen since the summer of 2009 – levels that are basically half of the commodity’s all-time highs reached in the summer of 2008.

The refusal has sparked a lot of speculation and market chatter. The popular take is that OPEC – Saudi Arabia in particular – is trying to squeeze out high-cost suppliers to the market by temporarily allowing oil to stay weak.  To an extent, that is certainly true.  Older production facilities like those in Saudi Arabia have lower costs and OPEC members such as Saudi Arabia have ample financial reserves to withstand any temporary drop in oil revenues.

But outside of the economic considerations, Russia is aligned politically and militarily with Saudi Arabia’s adversaries.  This keeps Russia on its back foot, and paradoxically can result in a vicious cycle as Vladimir Putin’s seemingly knee-jerk response to domestic problems has been to harass Ukraine, which can lead to more sanctions and problems for Russia.

In the middle of this is Russia’s central bank, which finally stopped trying to defend its currency a month ago and is now letting it float for the most part, with the occasional intervention thrown in, as they did this week.

My View: Russia’s problems will not go away soon, as the core dynamics for energy pricing seems to have settled into a new normal that will last for months.  That’s great news for those of us who buy gas, but it is still a potential source of instability going into 2015.

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