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Russia Ringfenced as Old Empire’s Currencies Thrive

Russia Ringfenced as Old Empire’s Currencies Thrive

Russia : The former Soviet republics have rarely been more free of Russia since reclaiming independence almost three decades ago.

For the first time in half a decade, the Russian currency suffered the worst performance in the first six months of the year among its 11 ex-Soviet peers. After the toll taken by sanctions and tightening U.S. monetary policy, the ruble is now down over 8 percent against the dollar in 2018, more than double the loss of any other currency in the group. Without the U.S. penalties imposed in April, it would have been as much as 4 percent stronger, according to the Bank of Russia.

While the region hasn’t been immune to a broader retreat from emerging markets, Russia is increasingly taking the brunt of the downturn in sentiment. By contrast, four ex-Soviet currencies are notching gains that place them in the top 10 performers globally so far this year. Still closely intertwined with Russia through capital flows and migration, the former satellites have the advantage as they steer clear of their larger neighbor’s costly geopolitical games.

Given the fallout from Russia, several regional upstarts now warrant a second look. At meetings with investors, only about half the time is spent on Russia and the rest on the Commonwealth of Independent States, a loose grouping of former Soviet republics, according to Oleg Kouzmin, an economist at Renaissance Capital in Moscow.