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Russia's Black Tuesday: The Blood Of A Free Market

Rumors of the Russian economy's imminent collapse into chaos have been greatly exaggerated.

When the ruble lost 27% of its value against the dollar in one day, traders were quick to call it Black Tuesday. The panic began when central bank officials decided they would stop supporting the declining ruble and let it reflect the rising money supply. Currency traders, scared by the lack of accustomed intervention and already worried about a possible resurgence of inflation, started a selling frenzy. The rout stopped only when the central bank stepped in. On Oct. 12, the ruble rebounded 4.8%, closing at 3,736 (chart).