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Putin's plan to curb rouble appreciation backfires
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THE KREMLIN was taught a painful lesson in economics this year after it meddled with exchange rates and nearly brought the Russian economy to a halt. A judo black belt, president Vladimir Putin pitted himself against the invisible hand of market forces and lost.
Putin ordered the Central Bank of Russia (CBR) to weaken the rouble against the dollar to give domestic manufacturing some breathing space in its battle against rapidly increasing imports. Although the move did give some sectors a boost, Russia's ballistic growth halted and the economy began to stagnate by last summer.
By October the Kremlin had conceded defeat and the rouble was given its freedom. The economy looks as if it will bounce back, but Russia is still on a steep learning curve and is ill equipped to deal with the increasingly complex problem of managing its currency.
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