While the above chart (sent to me by a friend) is an interesting take on Russia's travails (one can also find just about any equity index depicting a similar relationship), having external foreign currency obligations that cannot be met and a history of devaluation can certainly alter investor behavior.
Capital controls and other distractions will be forthcoming...as will continued aggression on energy policy (and perhaps militarily as well). Putin has not "staked his credibility" (with whom?) on a stable ruble. This is a G8 county will sub a G100 view of the world. How he will keep order will be described by future historians as a "draconian lack of due process".
Rouble exodus hits Russia credit rating
By Catherine Belton in Moscow
Published: December 8 2008 19:17 | Last updated: December 8 2008 19:17
Russia on Monday became the first G8 country since the start of the financial crisis to have its credit rating downgraded after Standard and Poor’s took fright at the recent exodus from the rouble and sharp drop in oil prices.
S&P said it had lowered Russia's foreign currency credit rating by one notch from BBB+ to BBB because of the “rapid depletion” of the country’s foreign exchange reserves and the “difficulty of meeting the country’s external financing needs”. It said the outlook for the rating was negative.
Russia’s reserves have fallen by $128bn since August to $455bn, as the country battles the capital flight that began following the war with Georgia and escalated as the oil price fell and the global crisis worsened.
S&P said Russia could be forced to spend all $200bn now parked in its two sovereign wealth funds on recapitalising the banking system and covering fiscal deficits in 2009 and 2010.
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