The ruble is afraid of elections in Ukraine
The Russian currency in the first half of the day Friday, it would seem, gathered strength and shows the growth of quotations. However, this positive can be misleading.
The short-term ruble supported the desire of the markets to lock in profits from the growth USDRUB this week.
By mid session, the pair played a strong start to the day with fall to 64.64 and is now trading at 64.84 (vs. high Thursday to 65.22). EURRUB fell to 72.63 in the morning, but by lunchtime had risen to 72.77.
On the side of the ruble – impressive ascent of the Chinese stock markets, which are literally pulled up after the review Stephen Mnuchin, head of the U.S. Treasury. In his speech he noted the progress in trade negotiations of the parties, which allowed the Chinese index of blue chip shoot by 4%, reaching highs last year. Incidentally, it is interesting that American stock markets react to such statements with much less enthusiasm, growing up just 0.2% since the beginning of the day and 0.8% in the last days.
However, in the coming weekend will be elections in Turkey and Ukraine: these events may adversely affect the positions of the ruble. The Russian currency belongs to the same group of emerging markets, the Lira and hryvnia. Simply put, a sharp weakening of these currencies is capable of pulling an entire class of assets. In the last time we saw that was in August last year, when the currency crisis in Turkey and the problems of Argentina pulled a ruble, despite the fact that Russia still does not have problems with balance of payments and payments on foreign debts.
In recent days the currency has been marked by a drop of 3.6%, nervously reacting to the restrictions of currency transactions, and fearing the growing power of Erdogan.
The hryvnia also behaves much calmer. Growth USDUAH for the last five days is 2%, but with the end of Thursday, the Ukrainian currency has started to recede 0.6%, and now continues the downward movement.
In both cases, you should wait for the market reaction to the voting results, as well as reviews of politicians, who will feature next week.