Tuesday Feb 3, 2015
russian Banks reel from the interest rate increases designed to prop up the ruble.
Let's connect the dots.
Oil prices collapse 50%.
Putin has bet the farm on oil, it is half the Russian economy.
The currency measured in rubles collapses against the US Dollar.
The Russian Central Bank raises rates to 18% to stem the flow of rubles being exchanged for anything of value.
Rates then fall to 15%.
Russian banks holding rubles suffer currency losses and increased borrowing costs.
This is why currency transactions are one of the four parts of Other Comprehensive Income.
Comments