Falling commodities prices, geopolitical and “rule of law” jitters weigh on Russia

One of the BRICs, Russia, is seeing steady capital outflows in the wake of the bursting of the commodities bubble and the invasion of Georgia. Throw in fears that foreign-owned property could be expropriated at any time and investors are running for the hills. Russia has been forced to sell dollars to prop up the rouble which in turn forces the central bank to buy dollars against the euro to maintain the 55/45 mix of USD/EUR rouble basket. This has been a major factor in supporting the dollar in recent weeks.