Russia – pressures in the pipeline

The dual pressure of Western sanctions and the decline in oil prices is a toxic mix for President Putin. It is likely that the markets will realise quite soon that Russia is going to run out of money (foreign exchange reserves) by mid-next year. That raises the spectre of bond defaults, bank failure and a further freefall in the rouble. We are short everything Russian. The effects are likely to be felt in Europe too, through the hit to German economic confidence and of course the debts owed to Eurozone banks. Russia is another reason to stay short the euro.

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