Putin's government isn't interested in a strong ruble now: As low oil prices make it difficult to balance the budget and as exporters, many of them state-controlled, complain about the lack of access to Western capital markets, a devaluation is the first order of business. What Putin doesn’t need is panic among ordinary Russians, which could damage his high approval ratings. As long as the central bank does its job of reducing volatility and deterring speculators, bank insiders will be free to use information about the timing of interventions to make a bit of money on the side.

That logic, however, only holds if one believes -- as Putin does, according to Kremlin insiders -- that both the Western sanctions against Russia and, more importantly, the oil price drop are only temporary. If they last longer than a year or two, Russia will be in real, long-term financial trouble and it will be harder for Putin to hold on to unlimited power.

http://www.bloombergview.com/articles/2014-11-10/who-benefits-from-a-floating-ruble

To contact the author on this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor on this story:
Max Berley at mberley@bloomberg.net