Russia

And so begins the inevitable downward spiral. A rate hike to 17% from 10.5% at midnight last night initially clears out a few of the less committed shorts leading to an 8% rise in the ruble, and then the bears come back in force unwinding all the gains. At a fundamental level, a rate hike like that signals panic.  At best it can only provide a short term boost to the currency. In the longer term - and that's not very long in a country which is already facing budget disaster and economic sanctions - before it adds yet more pain to the economic mess and restarts the inevitable fall in the currency. The only way they can prop the currency up if they really want to is to intervene heavily in the FX markets, but that will run down reserves at an amazing speed. And a lower currency also cushions the budget against falling oil prices and gives the economy some breathing room - it might import inflation of course but frankly I'd have thought that wa a risk worth taking.

It reminds me of Sterling being kicked out of the ERM - in the space of one day rates went from 10% to 12% to 15% and then back to 12% once the rate rises had failed to work. Do these panic hikes ever work? I can't think of an instance when they have.

Russia is screwed and only getting out of Ukraine and having sanctions lifted can save them - and even then It may be too late. Putin is going to have the whole USSR experience condensed into a few short years.

I'm just happy I'm not long USD debt issued by a Russian borrower - they have no chance of being able to refinance.