Russia's ruble was tanking on Tuesday faster than journalists could type, hitting levels against the dollar that were unimaginable even a week ago.
Q: So why should I care about a weak ruble?
A: Russia's plummeting ruble is swiftly upturning the nation's broader economy and threatening instability in a major world economy. When Russia defaulted in 1998, it helped set off a global financial crisis that caught fire in many emerging markets. So far, Russia's problems are mainly confined to home. But that could change, and neighbors that are closely connected to Russia such as Belarus and Kazakhstan are already worrying. A weaker ruble makes it harder for Russian businesses to repay any dollars or euros they borrowed. Some businesses might not be able to pay anything back at all.
A: It's unclear, although a plunging ruble certainly isn't good for him. Russians have weathered worse - in 1998, many people's life savings were wiped out. And in the final years of the Soviet Union, sometimes even basics like toilet paper were in scarce supply. So people are accustomed to living with pain, especially when they're told by Russia's powerful state television that this is all in the service of fighting the West. Putin's approval ratings are still close to record highs. But he might have to dial back his ambitions for Ukraine, and he has less oil money to spread around.
Q: Right. Oil. How does that fit into this?
A: The money you're saving on gas is money that isn't going to Putin - since June, oil has fallen nearly by half. A lot of analysts say that Putin lucked out when he came into power at the end of 1999: he took the reins at the beginning of a long run-up of oil prices. So he was able to shower his economy with dollars, creating a bargain with the Russian people: They could be prosperous as long as they didn't play with politics. Until this week, the ruble was falling along with the price of oil. This week, oil is calmer but the ruble kept plunging.
Q: So are those sanctions finally working?
A: They matter. But it's tough to put a number on it. The sanctions have been a slow creep. The ones imposed in March, when Russia annexed Crimea, weren't meant to hurt the economy as a whole, just the pocketbooks of people close to Putin. Stronger restrictions were imposed in July after Malaysia Airlines flight MH17 was downed over eastern Ukraine. Russia's biggest banks now have a much harder time borrowing dollars, which makes life tough for the rest of the Russian economy. But many investors are steering clear of Russia not just because of sanctions but because the broader political situation is just so unpredictable.
Q: Does this mean Putin has to back off in Ukraine?
A: Putin has never explicitly stated his goals for Ukraine - and he has denied sending troops into Ukraine's rebel-held east, even though Western journalists have seen them there. So we don't know what will happen next. Some analysts think he will be forced to back off. A fragile, days-old cease-fire appears to be holding in eastern Ukraine, which might be a first sign of conciliation. But NATO and Ukraine say that Russia has recently reinforced its positions there. Some analysts and diplomats say that the Kremlin might take an even tougher stance abroad if it needs to prop up its ratings at home.