Since the sine qua non of Dutch disease is an overvalued currency, we can see if this is actually the case with the Russian ruble.
The first initial practical efforts have already been taken, foreign companies can hopefully be able to make loans and attract capital in the Russian ruble market starting this year.
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Many readers may not remember the first half of 1998, but may be more likely to recall the Russian ruble crisis in July 1998 and the ensuing collapse in the fall of hedge fund Long-Term Capital Management (LTCM).
In a Financial Times op-ed Monday, former Barclays CEO Martin Taylor relates a tale about the run-up to the Russian ruble crisis of 2008, when he claims that Diamond and traders he led at the then-nascent Barclays Capital dishonestly claimed certain counterparties were Swiss or American in order to get around limits on country exposure.
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Indeed, on Aug. 17 the Russian government was forced to float the ruble.
But while ruble volatility might or might not be a problem, I will very freely admit that I lack the economic chops to analyze the impact of exchange rate liberalization on the Russian economy, it seems almost impossible to argue that the ruble is excessively strong.
In 1991 the Russian government stole savings out from under mattresses by canceling 50-ruble and 100-ruble notes.
In the past two years, with the ruble stabilizing, a dealer could invest his cash in three-month Russian T bills, which, until recently, had annualized dollar yields of 100% or more.
Since the ruble tends to strengthen when the price of oil rises, because the Russian budget and economy are both so heavily dependent on energy exports, you would expect that a tripling in the price of oil would have significantly boosted the ruble.
Now while the Russian government still heavily intervenes in currency markets and is far from a paragon of laisez faire, th e ruble is fully convertible.
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