Today, the ruble continues to slowly drift in the direction of weakening

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The ruble this morning continues to slowly drift in the direction of weakening. This story now has two mutually reinforcing factors – the oil, which should have already been a lot said in yesterday’s review, as well as internal regulatory. The players present nagging feeling that the Russian money market is functioning in situations of extreme scarcity of money supply and demand for loans at all levels. Banks and borrowers have long and unsuccessfully trying to agree on some mutually acceptable terms. But this is no easy task. The Ministry of Finance allocates the BFL is already higher than 8.25 percent, and large Russian banks are still “old-fashioned” tout customers on ruble deposits at 6.5% or so.
Obviously, to restart this market, someone from the counterparties have to take a step towards the other, otherwise the ruble will not be able to work effectively with loan and Deposit mass, which slowly continues to get out of dollar instruments (including Bank deposits) in search of yield, but, finding nothing, returns to dollars – but in the form of trading accounts. Perhaps some surge happens later in the season, cutoff date for the interim dividends, but once this story will be played, with high probability again comes an ideological vacuum.
As of 12:15 Moscow time the ruble is barely noticeable 65,75 strengthens to the dollar in an attempt to return to their traditional corridor 65,30-65,70. In tandem with the Euro also unobtrusive and unconvincing with opening strengthened by 0.17% to a value of 76.25 ruble per Euro. Volatility decreased significantly, but complacency is still inappropriate.
Although gold has increased with the closure of the US market, 0.37%, but in the last couple of days marking time, reflecting the traditional boring intraday: the States – a little down on China a little bit up in the resulting near-zero dynamics. In General, gold now makes sense to keep in the portfolios on the basis of a) the high risk of a strong correction in global markets; and b) intra-annual seasonal pattern, obliged by the approach of Chinese New year according to the Lunar calendar in February, Indian and traditional “solotouch” weddings in March-April. Retail physical demand for the precious metal always has a very stimulating quotes his near futures.
Speaking on the global FX markets, on the background of relative calm and predictability of everything, pretty much stands out the story of the Chinese yuan, which has received kick-start after the announcement by the U.S. Treasury that China finally removed the status “currency manipulator.”
However, it is not so simple. According to S&P Global Ratings, the local governments of China, you probably have data required an incredible 40 trillion yuan or more (about 5.8 trillion. U.S. dollars) off-balance sheet debt, which suggests further defaults and deterioration in the liquidity of the bond market of China as a whole. Late payments on the bonds in 2018 has already exceeded previous highs. A large part of the debt associated with transportation infrastructure bonds, which do not necessarily have the full financial support of the local authorities.
During today’s early trading, the yuan decided to make a break for the strengthening against most world currencies, the dollar, zatormozilas at the level of 6.93 to the dollar, however, while retaining all capabilities and backgrounds to break in the future non-level 7/$.
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Vladimir Rojankovski,
Expert
“International financial center”