The ruble has a large “reserve” up to 50 per dollar
The voltage on the global currency markets after the US Federal reserve meeting last week has declined significantly. In the words of Powell’s every man for himself found what you wanted to hear, but still no answer to a number of perennial issues – such as the degree of influence for the development of the events around the “trade wars”, the assessment of the impact of the major currencies in a deflationary processes in the world, the downside risks to the us economy in successive monetary tightening (and inevitable reaction of Donald trump in this regard), which, apparently, uncontested aimed the head of the fed Jerome Powell.
Regarding the first, the struggle on this front is with varying degrees of success. As you know, over the weekend, Donald trump reached an agreement in the framework of the North Atlantic trade partnership NAFTA with canadian Prime Minister Trudeau that the U.S. markets, apparently, gathered here today is an event to celebrate.
As a consequence, in the course of the movement of the ruble remains unusually calm. There is a feeling that investors have not yet determined the potential depth of all the above risks. In this case, although the ruble is still present is greatly exaggerated (and therefore unfair) geopolitical discount, the chances of its implementation are negligible. A significant strengthening of the ruble could be, though fundamentally justified, but in practical terms it is only possible with the resumption of carry trade, which we wrote earlier.
At the same time, the ruble has a very large “reserve” up to 50 per dollar, but such boundaries may be seriously considered only in case of clarifying the situation about sanctions status of OFZ (Federal loan bonds). The market is now, in fact, plays a neutral scenario: American politicians and lawmakers are preparing for midterms – the November elections in the Congress and it is now for them the most important thing. Therefore, until the end of the year pedaling the anti-Russian sanctions of the subjects is highly unlikely.
Interest in cheap markets – including to Russia, despite sanctions – is likely to grow. This is expressed in the inflow of external money into the stock market and in low-risk bonds (primarily Federal loan bonds and corporate blue chips like banks and oil companies). However, as is usually the case with the attractiveness of the Russian market for global investors, “it comes from nowhere and goes nowhere”.
As a consequence, the residual factors for the ruble before the annual cyclical strengthening of the dollar in late November, will be the price of oil (the forecast is favorable) and return the CBR to the market to buy up dollars in the reserves (good prognosis). Apparently, the current level of 65.50-66,00 rubles per dollar and 76-77 for the Euro – look as the centers of balance.
“International financial center”