The expected weakening of the ruble in the next two weeks

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The Russian market has opened decrease due to the decrease to 2.2% of the Asian stock indices and futures on European and us counterparts, 0.4% and 0.3%, respectively. The American SP500 ended the day Thursday with a decline of 1.33% to 2677 points, the VIX has increased by 5 percentage points to 22-25%, while the dollar index declined. Such reaction of the markets was caused by the statement of the President of the United States on the introduction next week of import duties on steel and aluminum. Thus, the American authorities want to boost its steel industry.
Therefore, the next trade war will lead to growth of prices on metals inside the USA and in the world market. Stock prices of metallurgical companies increased in the range from 1.5% to 10% in one day. In summary, the U.S. government continues a policy of protectionism that President trump promised in his election program. At the same time, the Senate made by the new Head of the fed Jerome Powell, where he again declared the gradual rise in interest rates, earlier in the day confirmed a stable result in a 1.5% consumer spending, which are fed into the calculation of interest rates under the Taylor rule.
Given that next week the Russian market will be short because of the holidays, and one week in Russia will take place presidential elections, we expect the weakening of the ruble. The swap is the difference between normal swap and foreign exchange, demonstrates the increasing, indicating that the demand for dollars. We attributed this insignificant amount of net payments on external debts, and with some liquidity outflow from Russia due to the possible introduction of new sanctions of the USA against Russia in the next 25 days, as well as a certain nervousness of investors as the result of the message of the RF President to the Federal Assembly.
Viktor Veselov,
Chief analyst,