The US dollar's recent losses against the euro and yen have been extended. Oil prices continue to swoon, and the price of Brent oil has fallen below $60, and WTI  approached $54.  

While most emerging market currencies are higher today, a notable exception is the Russian ruble. Very early Tuesday in Moscow, the central bank hiked the key interest rate to 17% from 10.5%. This follows about five days after the central bank hiked by 100 bp.  

The continued drop in oil prices did Russia no favors, but Russia's own experience in the late-90s, would have warned that its move was fraught with risk in any event. In 1998, Russian interest rates were near 150%, and this did not stop the rouble from falling. The interest rate is annualized, but the rouble's average net change over the past 12 sessions is a little more than 5% daily. The actual volatility over the past month is 57.2%. 

Many fear that capital controls may be the next step for Russia. Although many investment managers reduced exposure to Russia as of the end of September, Russia's total external foreign debt stood near $680 bln. Despite Putin's talk about wanting to seek alternative to the dollar, and willing to accept yuan for its oil sold to China, around two-thirds of its hard currency debt is thought to be denominated in US dollars. The price of insurance via a five-year credit default swap is now near 580 bp, more than double the price as of the end of October. It is the highest since 2009.  

The 2% decline in the Nikkei kept the dollar under pressure against the yen.  Last week's low near JPY117.45 was taken out, and the JPY117 retracement target has likewise given way.The low, thus far has been near JPY116.25. The next key retracement target is near JPY115.50. This level corresponds with a 38.2% retracement of the move that began on Oct 15 and a 50% retracement of the move since the BOJ expanded its asset purchases on October 31.