The 12 worst investments of 2014, #4: the Russian rouble

Decline in 2014: 46.5%

See all 12 of 2014’s worst investments here

What happened?

The Russian rouble began its gentle decline in July this year.

The slide gathered pace from October to November, but in the last week of November it crashed. In the space of a week the rouble lost nearly 12% of its value against the dollar and from the start of December has lost another 30%.

Who are the losers?

Moscow shopkeepers are already changing their prices every day, as inflation looms, says The Economist. Outside Russia, bond investors Pimco, who have a fifth of their emerging markets portfolio made up of Russian debt, faced losses of 7.9% said Bloomberg. Michael Gomez, head of emerging markets at Pimco, said in defence of the strategy, “The investment themes in Pimco’s portfolios are based on long-term ideas and views”.

Who are the winners?

Turkey – It has seen “its current account deficit significantly reduced”, reported the FT. Its finance minister, Mehmet Simsek, said, “We can no longer be seen as part of the ‘fragile five’.” Even as sanctions bit and the rouble collapsed, Putin’s “popularity is at a record high of 81%”, said AP.

What happens next?

Putin is locked in a war of wills with the West and it’s a matter of pride for him to show that they can stand up to the US. The main thing is that “Russia can afford its debt which stands at about $700bn or 35% of GDP” the BBC said. It added, “Most analysts agree that Russia currently has enough to pay the $200bn due in the next few years”.

What have we learned?

Russia is extremely vulnerable to outside pressures.

See all 12 of 2014’s worst investments here