The Russian economy will remember 2014 as an annus horribilis and its decline can be tracked expressly through a cursory glance at the fortunes of the rouble, which has been in free fall all year. At the time of writing, the rouble is at an all-time low – a feat that has occurred with remarkable consistency on multiple days over the past few months.

Today (5 November) the rouble lost 2.56% of its value on the news that the Bank of Russia – Moscow's central bank, which has been pumping billions of dollars into the country's foreign currency market in an effort to prop the currency up – is to cap its daily expenditure to $350m (£219m, €280m) per day.

This is clearly the beginning of the bank's move to establish the rouble as a free-floating currency – moving away from the fixed exchange rate it has traditionally used.

The currency's decline has been attributed to two main factors: the sanctions that have stopped Western goods entering the Russian consumer markets and which have barred Russian banks and companies from raising finance on the EU markets; and the falling oil price, which has left Russia's energy industry – by some distance its largest exporter – in dire financial straits.

Who are the main losers of the depreciating rouble?


Financial institutions are clearly losing out from the exchange rate. Russian banks have for some years been some of the largest borrowers from the EU and US bond and loans markets, raising billions to on-lend to Russian corporates and to the domestic financial sector.

Since the sanctions, those that are more than 50% owned by the government – including Sberbank and VTB – have been banned from doing so, meaning they have had to rely on the forex handouts by the government and local currency deposits.

Furthermore, on the consumer banking side, Russians – wealthy and otherwise – have been removing their money from bank accounts for fear of it losing its value further still.

Energy companies

On 29 October, Rosneft posted a huge profit fall – 1bn roubles over the third quarter, due in large part to being forced to repay foreign currency loans with domestic currency. The same fate has befallen Novatek, a state-owned gas behemoth.

Rosneft has been forced to ask for 2tn roubles from the National Wealth Fund to cope with the cash shortages it faced. Rosneft has been one of the biggest borrowers on the European markets in recent years.

The company has been involved in some of the world's biggest trade loans in recent years, raising the bulk of its debt finance on the European markets.

In January 2013 it raised more than $16bn on the international markets to fund the purchase of TNK-BP. Among the lenders were Britain's Barclays and France's BNP Paribas and Crédit Agricole.

Two months later, mining giant Glencore Xstrata secured $10bn in pre-payment finance for the purchase of crude oil from Rosneft. The finance was provided by a syndicate of international banks including Lloyds, HSBC, Barclays and Bank of America.

In August, Reuters reported: "Russia's syndicated debt market, worth $47.2bn last year, has dried up since hostilities broke out over the Ukraine. Just two corporate loans have been signed since March - a $1.15bn pre-export loan for Russian iron ore company Metalloinvest and a $450m unsecured loan for potash producer Uralkali".

The reliance on Russian rouble then, will compound companies such as Rosneft's ability to repay these loans (not to mention refinance them) on decent terms.

But there are also some to have benefited from the collapse:

Steel companies

In its results for the year to September, Russia's second-largest steel manufacturer, Severstal, is among the Russian exporters making hay while the rouble flounders. The steel giant has said a weak currency, along with poor overseas competition, has helped compensate for lower domestic steel demand.

The company – owned by oligarch Alexey Mordashov – said in its financial statement that it has returned to profit margins not seen since pre-2008, partly because it sold its US plants, which were suffering on weak steel prices. It was previously getting one-third of its revenue from the US.

"The rouble weakening provides additional support for the Russian steelmakers' export competitiveness," said Russia's second-biggest steelmaker in a statement.

Food retailers

Magnit, the largest food retailer in Russia, posted a 40% increase in its third-quarter earnings in October, having maintained low prices through the financial turmoil, and also capitalised on the food import ban from the EU and US.

Magnit said its net profit had amounted to $395m in the third quarter, beating analyst forecasts of $366m. Because it does not raise extensive capital in foreign currency, it has been relatively unaffected by the rouble's depreciation.

The low-cost retailer is prominent in Russia's rural provinces and has 9,000 stores across the country, the majority of which are small neighbourhood stores.

"The third quarter was a challenging time for the business units of the company responsible for logistics and purchasing," said Magnit chief Sergei Galitsky in a statement.

"We managed to adapt to the changing conditions, in as short a time as possible, which resulted in a strong performance in the third quarter."