2023-07-17 06:00:00
For the second week in a row, the pair closes at around 90.
Has a new middle ground been found, or are traders waiting for the “right” circumstances? Although you and I understand who they are – these traders.
I think it’s both in this case. The weak ruble does support the budget, but there have been no real triggers for the strengthening of the Russian currency for a long time. Yes, oil prices are rising, but .
What needs to happen for a real trend reversal?
1️⃣ Strong increase in export earnings
But, since the markets for the Russian Federation are now limited, all hope is for the restoration of China, or at least for increased stimulation by the Communist Party of the country’s economy.
I would add that a rate cut alone will not be enough, not only because of the time lag, but also because of a flurry of problems, including a real estate bubble and 20 percent youth unemployment.
2️⃣ A jump in demand for the Russian currency
It would seem that given that the Bank of Russia may raise the rate on Friday by 50 or even 100 bp. The ruble is guaranteed growth, but due to market isolation, the effect will be restrained. I would even say almost negligible.
If earlier the increase in the rate made the carry trade strategy (the strategy of making a profit on the foreign exchange market due to different interest rates) more attractive and led to an influx of funds from foreign investors, then once morest the backdrop of the geopolitical situation and recent showdowns, many will prefer to stay away.
3️⃣ Change in the rhetoric of the Fed. At the next meeting on July 26, the rate, but further, despite the hawkish gurgling, I’m not sure.
And although the initial economic assessment is quite optimistic, the number of bankruptcies is growing. The driver of decline can serve, for example, the service sector, which is more than 70% of US GDP.
The point in the question will be put by the data. The ISM report on manufacturing activity is expected to show a slowdown in growth. The same applies to the demand for services, as well as data on industrial production and the start of housing construction.
4️⃣ Well, and an additional factor that can affect the ruble. New trends in the field of sanctions.
Let’s not forget: imports have been practically restored recently thanks to the creation of powerful hubs outside the Russian Federation.
But… Everything flows and everything changes. Today the term of the grain deal ends.
To be continued? And what regarding Türkiye? Will economic ties remain at the same level as before? A huge number of questions. But all this cannot but affect the exchange rate of the ruble.
What else can affect the ruble exchange rate?
Yes, whatever.
• For example, the situation on the public debt market. And she’s not too happy. slowly continues its decline. And it’s already becoming a trend.
The situation should be monitored very carefully. Something is no longer funny. And a further fall in prices for government bonds is another trigger for the continuation of the trend for the volatility of the ruble exchange rate. And, by the way, to the decline of the stock market.
• And also geopolitics. She doesn’t sleep either.
Well, what is the result?
Let’s just say, most likely, if there are no dramatic events, we will jump at the current (plus or minus 3-4%) levels.
But some amount of yuan or USD/RUB futures or , obviously, will not hurt. Anything can be.
But … not as much as, for example, two weeks ago. Apparently, the main movement is behind us.
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