The Russian rouble has moved from above 70 to the US dollar in late January to around 50 in mid-April, making it one of the best-performing currencies in the world this year. This is particularly remarkable as the dollar has been quite strong during this period, continuing to appreciate against the euro. So, what is behind this sudden rouble strength?
For most of last year, the rouble traded on the oil price and geopolitics, so it could be assumed that either of those two factors has changed materially. The oil price has moved from $56 to $60 per barrel this year, and the so-called Minsk II agreement was reached on February 12. Is that enough to explain the recovery? Probably not, especially considering that the oil price has been flat over the past two months while the rouble rallied the most. The rouble thus seems to have de-correlated from the oil price, at least partially and temporarily. And there has been fairly broad international scepticism over the Minsk II agreement (which we do not share by the way), making it difficult to believe that that is the reason behind the rouble’s strength. Read more
Russia’s 10-year bond yield has climbed for the 10th consecutive day to a new five-year high of 12.4 per cent as investors continue to exit the country’s financial markets, fast FT reports.
The rouble regained its footing somewhat last week, but only thanks to central bank intervention. It is today once again the world’s worst performing major currency, falling 1.4 per cent to 53.62 per US dollar (see chart below). Read more
Source: Thomson Reuters
The Russian rouble dived deeper to new lows on Friday, as the central bank’s decision on Wednesday to let the currency float failed spectacularly to put a floor under the exchange rate. It went briefly through Rbs48 to the dollar during the morning before recovering slightly, down from a low of Rbs45 to the dollar on Wednesday.
“People are in disbelief. The rouble is being smashed again,” said Timothy Ash of Standard Bank. “The central bank is nowhere.” Read more
Russia has picked a symbol for the rouble kitting out the five centuries old national currency with a contemporary new look to rival the US dollar ($), the British pound (£) and the Japanese yen (¥) . It’s time for traders to take the rouble more seriously.
Hit by hyperinflation in the chaotic early 1990s and then by repeated devaluations, Russia’s rouble has become associated with trouble since the Soviet Union collapsed. Read more
Having attracted less interest from investors in the good times, Russia has made fewer headlines in the recent emerging markets turmoil than its fellow Brics – Brazil, India and China.
But its currency, bond and equity markets have suffered quite badly in the sell-off triggered by the US Fed’s plans to end quantitative easing. And sharp falls on Thursday prompted by a sudden sell-off in crude raise questions about Moscow’s ability to keep Russia’s flagging oil-fuelled economy moving in the coming months. Read more
Russia lambasted Japan and other countries this week for deliberately weakening their currencies to gain competitive advantage in global trade. Alexei Ulyukayev, the central bank’s first deputy chairman said: “We’re on a threshold of very serious, confrontational actions in the sphere that is known… as currency wars.”
So how come Russia itself is buying dollars to weaken its own currency? Read more
European banks are scrambling to issue rouble-denominated bonds as they take advantage of moves to liberalise Russian capital markets as well as growing demand from domestic investors for unsecured bank debt, write Mary Watkins and Philip Stafford on FT.com.
HSBC’s Russian arm has applied to the Central Bank of Russia to issue the bank’s first rouble-denominated bonds. The programme would allow the bank to issue a maximum of Rbs10bn ($324m) in two tranches. Read more
Bruce Bower of Verno Capital.
Market watchers have been preoccupied with a myriad of crises over the last three years, but it is still surprising that the world seems to have missed an important fundamental change in Russia’s economy.
Since 2009, Russia has abandoned fixed or managed exchange rates and moved towards a freely floating rouble. Monetary policy and interest rates, previously set by global financial markets, are now managed by the Central Bank of Russia (CBR) in an inflation-targeting system similar to most western central banks. The benefits are obvious: the economy now has a shock absorber to offset volatile movements in the price of oil and international capital flows. How will this benefit investors? Read more
For weeks, bankers and analysts have been cautioning about how much money is flowing out of Russia. Now we know how much.
According to a report by the central bank, capital outflows reached $18.7bn last quarter and a whopping $13bn during the month of September alone. Read more
August has been an unusually quiet month for Russia, with fires, coups and wars conspicuously absent. In fact, the only area that is seeing the usual August excitement is the country’s currency market.
Since the start of the month, the rouble has managed to lose all of its 2011 gains and then, just as easily, post its biggest three-day advance in over two years.
While the rouble’s quick descent earlier this month has created a great deal of uncertainty on the market, analysts have been quick to point out how the volatility actually shows the positive evolution of the central bank’s monetary policy. Read more