Is Kazakhstan showing Russia the way? Kazakhstan's central bank allowed a 25% depreciation of the tenge on Wednesday. Moscow, meanwhile, is forlornly trying to control the ruble's descent. The ruble fell quickly to the central bank's new floor. Forward rates imply a further 20% depreciation over 12 months.
The cost of defending the ruble is growing. Fitch downgraded the country's credit rating on Wednesday to BBB, below Lithuania. The main concern: a rapid depletion of foreign-exchange reserves, down by about $210 billion to $390 billion in six months.
Moscow's fear of rapid devaluation stems from the 1998 financial crisis. Another panic could destroy Prime Minister Vladimir Putin's reputation as a safe pair of hands.
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