Toxic the ruble is forcing investors to flee
The major fall in emerging market currencies occur when OTC watch for cross rates against the dollar. This fact is convincing evidence in favor of the speculative nature of what is happening. In this sense, the Russian ruble devalued since the beginning of this year already 24%, despite the seeming disaster of what is happening, yet does not look as bad as the Turkish Lira collapsed in the same period by 73% and the Argentine peso collapsed more than doubled by 114%.
A new theme in the currency markets GEM – the Indian rupee, which fell for the week by 2.2%, while trading began to occur amid high intraday volatility, which indicates a high probability of acceleration of negative dynamics. Their fear was expressed today by Prime Minister Narendra modi Damodaran.
In our view, what is happening is a combination of gaming algorithmizing strategies in the Forex market and the strengthening of the dollar associated with the “flight to quality” as the background non-stop fall of the American Nasdaq are multiplying technical indicators showing the fast and deep correction, which is obvious on the background of “political” issues such as Facebook, Twitter, Google, Tesla, and others that make up the backbone of the capitalization of the US stock market.
The main question, of course, as always – how long it will last, and the levels at which sales may be suspended. Looking at the above-mentioned currencies of Turkey, Argentina (and many other SDRs GEM) – it is impossible to predict neither the first nor the second counts. Obviously, currency forecasts are only there, where traces of the underlying causation and justification. At the moment the only thing we can say with a high probability is that, judging by the strength of the “outcome quality”, the negative scenario stock market drop at this point is almost inevitable.
It might be also in the upcoming parliamentary elections in the United States. Enemies Donald trump, abundantly present among managers of U.S. investment companies may deliberately create the ideal conditions for sales on the US stock market began and occurred on the background of them (and not earlier or later!), and thus, the American opposition would have a strong case to appeal to the failure of the economic model of trump.
Meanwhile, as of 12:45 Moscow time, the Russian ruble, as expected, short-term referring to mark 70/$, but “fearing” the new psychological level, slightly stronger and has built in sawtooth “sideways” around 69.85 mm rubles per dollar. Because the main events affecting the global currency, is now happening in the American trading session, and every day notorious the trigger may suddenly work, we advise traders to be complacent after the official trading in the MSC.
“International financial center”