Last week saw Russia driven to the brink. The Ruble was on the verge of crashing. The oil price, the stock market ,and the currency were all in a slump; only the depreciation rate was double digit. Middle class Russians had to convert their Rubles - and even their cars and jewelry - into dollars to deal with the upcoming crash of the Ruble. 　　

On Dec. 17, Russia's Ministry of Finance confirmed the sale of its foreign exchange reserves to prop up the exchange market. Later, the Ruble rebounded sharply, gaining 11 percent. The next day, Russian president Vladimir Putin held a news conference to send out signals on stabilizing the economy. However, the effect of these bailout measures remains to be seen.

The Ruble defense war has been white-hot. The central bank of Russia raised the benchmark interest rate from 10.5 percent to 17 percent in the space of one night. But this did not halt the downward trend. At one point last Tuesday the Ruble dropped to 80 Rubles to the dollar. High-level Russian officials began to make noises about possible capital controls. If the Ruble continues to fall, Russia might implement such measures. The central bank of Russia had already undersold over 70 billion dollars to save the exchange rate, but the Ruble was still in freefall. Russia was forced to raise the benchmark interest rate to reduce capital outflow, though the measure would hit the domestic economy hard and the interest rates of credits and loans would rise significantly.

In this war in defense of the Ruble, who is the enemy? Nobody knows. Is it the US? Well, yes and no. Fundamentally speaking, Russia has two adversaries: one is its fragile economic structure and the other is the market expectations that are bearing down on Russia. The second enemy is almost invisible. Such expectations are a combination of multiple political and economic factors. The recent international political struggle is approaching the end game. As the Russian economy has become integrated with the global market system, and is highly dependent on the dollar, when the market bears Russia, a Ruble crash is inevitable. 

The article is edited and translated from《卢布保卫战，谁是俄罗斯的敌人》, source: The Beijing News, author: Sun Xingjie.