If I were a very proud Russian leader I would default on all non-ruble debt. Or at least threaten to do so. Who's it going to hurt? Only those putting the financial pressure on me in the first place. Buyers would be back soon after anyway. Yield is a drug.
If I were a scheming, power hungry Russian leader I’d enjoy the economic squeeze as it will depower the oligarchs and give me an opportunity to ‘rescue’ their businesses by taking them into State (my) hands.
If I were a chess playing Russian leader I would sit it out and wait for my opponent to make their next move having already thought eight moves ahead.
If I were a pragmatic Russian leader wanting to sort things out sensibly and was willing to swallow my pride then I would do the following. As the size of my domestic money supply is about the same size as my FX reserves (Hat-tip @barnejek) I would set up a currency board pegging the ruble to my reserve currencies. I would lose control of my domestic monetary policy in the process but hey, I’ve pretty much lost it anyway with 1 month implied rates currently trading around 41% which is a complete disconnect from the CBR. This may not mean much to the man on the street but as his banks have to do chunks of their funding through the cross-currency then it will pretty soon. If I was then to look at my current exchange rate and plot it in real terms back 14 year against brent crude then I might suppose that my currency is cheap all the way down to $25 Brent.
Brent in Orange the JPMRUB index in white with the down arrow showing where it's expected to be when next monthly published including the recent ruble falls.
If I was to think that sanctions would warrant 25% of that weakness then ruble is still pricing brent at $35-40. I would consider that my imports are going to collapse anyway but even taking the higher historic October number there is still 15 months import cover. Considering the undervaluing of the ruble, with a currency board peg, or even a cap at say RUB70/USD, I may still gain some domestic credibility. Doing this would halt my domestic outflows, stabilise inflation expectations and provide a nominal anchor. As a little side swipe I would allocate a few billion to buy oil swaps from an investment bank in order to get 10x leverage in non-deliverable oil. Which should crucify all the CTAs who are mega short oil, killing two birds with one stone.
And finally if I were a rich man Russian leader I'd fiddle on the roof.