USD/RUB

 

 

The Russian ruble during the last year has shown miracles of resilience, and does not rush to decline at every downward turn in the price of oil. However, on the horizon there are events that the Russian ruble cannot cope with and, most likely, it will have to surrender its gain and its defensive lines, and become weaker, and the question is: how much the ruble may devalue, and how fast it will happen.

In a package of sanctions, approved by Donald Trump recently, laid the framework for a complete ban on investing in government bonds of the Russian Federation and, when the US Treasury registers this and the document takes legal force, the world's largest investment funds will be forced to sell Russian debt securities. Of course, this will not happen in one day. Investor funds are very significant, investments are estimated at 60-70 percent of the total market volume, and it takes time for a full sale, and given that no one wants to sell in bid, it may take months. The saddest aspect of this story is that investment funds that might remain in the papers will also start to go out, pushing quotes ever lower and lower. The outflow of foreign capital under these conditions will be substantial.

The negative point is that as a rule, participants have built marginal positions in the debt segment of the Russian market, and many of them build "debt pyramids" by pawning bought bonds several times.

On the other hand, the "economic monster" seems to be creeping up, and is capable of exerting a no less destructive effect on the stability of the Russian economy, thereby weakening the ruble.

The volume of Russian exports is falling and the balance of the positive trade balance has become minimal in almost 15 years! Traditionally, Russia has been a country with a positive trade balance, and the situation can drastically change. Support for the ruble from exporters will decrease by reducing the inflow of currency into the country. The reasons for these events will remain outside the scope of this article. The main thing is to make a correct conclusion about the movement of the rate, for example, in the pair USD/RUB. With such a development of events, the conclusion suggests that in the future, the Russian currency will weaken.

However, it should be noted that the fall is likely not to be sheer and strong in amplitude. There are forces that will be able to stand on the side of the Russian currency. What is important is to extract "speculative profit" from the situation, to gain a position, and the target at $ 65 for the US dollar is quite achievable in the medium term.

 


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Care: These reviews are a private opinion of ARUM CAPITAL and are provided for information only. In no way can the provided analysis be considered as an action signal, neither is it any sort of investment advice (for the purposes of EU Directive 2004/39/EC). ARUM CAPITAL waives any liability for the trading results which may arise after using these reviews. These materials contain NO warranties or guarantees, either direct or implicit, on the precise, complete or confirmed character of the details they contain.

 

 

 

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